THE  COST  OF  MINING 


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THE  COST  OF  MINING 


A  DISCUSSION  OF  THE  PRODUCTION  OF 
MINERALS  WITH  REMARKS  ON  THE 
GEOLOGIC,  SOCIAL  AND  ECONOMIC 
FOUNDATIONS  UPON  WHICH  IT  RESTS 


BY 
JAMES  RALPH  FINLAY 


PAST   SECRETARY    AND   PRESIDENT   MINING    AND   METALLURGICAL   SOCIETY    OF   AMERICA;    MEMBER 

AMERICAN    INSTITUTE     OF     MINING     AND     METALLURGICAL    ENGINEERS;     LECTURER   AT 

HARVARD     AND     OTHER     UNIVERSITIES     ON    THE     ECONOMICS     OF     MINING, 

CONSULTING    ENGINEER   UNITED    STATES   BUREAU    OF    MINER,    ETC. 


THIRD  EDITION 
ENTIRELY  REVISED,  ENLARGED  AND  RESET 


McGRAW-HILL  BOOK  COMPANY,  INC, 

NEW  YORK:    239   WEST  39TH  STREET 

LONDON:    6  &  8  BOUVERIE  ST.,  E.  C.  4 

1920 


/V  /Jr. 


COPYRIGHT,  1909,  1910,  1920,  BY  THE 
MCGRAW-HILL  BOOK  COMPANY,  INC. 


THK    M  A  P  1,  K    PKKSS    YORK    PA 


PREFACE  TO  THIRD  EDITION 

During  the  long  and  various  delays  that  occurred  while  the  revision 
of  this  book  was  taking  its  present  form  the  question  was  entertained 
whether  it  would  not  be  fairer  to  author  and  readers  to  give  it  a  different 
name  altogether.  It  will  be  seen  that  it  is  no  longer  so  narrowly  tech- 
nical as  it  originally  was. 

But  the  question  was  answered  in  the  negative.  While  it  is  true  that 
some  of  the  suggestions  might,  if  properly  presented,  interest  the  public 
at  large  it  seems  at  least  as  logical  to  believe  that  anything  that  will 
affect  the  mining  public  will  affect  the  whole  public.  The  gist  of  this 
idea  is  contained  in  a  beginning  at  the  revision  made  in  1917: 

"  There  are  in  the  United  States  alone  some  two  to  three  million  men  engaged 
in  the  mining  and  metallurgical  industries.  With  their  families  and  those  who 
are  engaged  in  supplying  them  with  living  necessities,  that  is  to  say,  with  the 
merchants,  professional  men,  educators,  etc.  who  are  employed  in  mining  com- 
munities, we  may  count  on  not  less  than  twelve  to  fifteen  million  people  who  are 
dependent  upon  and  therefore  interested  in  those  industries.  This  is  twelve  to 
fifteen  per  cent,  of  the  total  population.  If  we  apply  this  proportion  to  the 
whole  English-speaking  world,  as  we  may  fairly  do,  we  find  that  at  least  20,000- 
000  people  are  directly  interested  in  mining  and  its  cognate  arts.  When  we  con- 
sider that  this  number  equals  the  white  population  of  the  British  Empire  of  a 
century  ago,  it  becomes  evident  that  they  make  a  field  for  literary  effort  larger, 
taking  into  account  the  growth  of  wealth  and  information,  than  that  whole 
Empire  could  furnish  at  the  end  of  the  Napoleonic  wars." 

This  paragraph  will  illustrate  the  growth  of  the  conviction  that  such 
a  body  must  act  upon  public  opinion,  whether  consciously  or  not,  as 
inevitably  as  the  forces  of  nature. 

It  is  therefore  sufficient  to  ask  indulgence  of  the  mining  public  alone 
for  interjecting  among  the  obscure,  sometimes  trivial  figures  of  mining 
operations  certain  suggestions  of  broader  scope.  I  may  quote  again 
conveniently  from  the  earlier  paper : 

"It  is  necessary  also  to  dwell  upon  the  development  of  the  human  animal, 
intellectual,  social  and  economic,  which  must  take  place  in  order  to  bring  this 
industry  into  existence.  Let  us  recall  the  obvious  fact  that  to  the  Algonquin 
Indians  who  lived  in  Pennsylvania  three  centuries  ago  the  anthracite  coal  fields 
were  not  worth  the  hide  of  a  single  deer,  and  to  those  same  Algonquins  the 
Calumet  and  Hecla  was  not  as  valuable  as  a  boulder  of  float  copper.  Then 
there  is  the  history  of  these  developments.  How  and  why  did  great  mining  dis- 
tricts come  into  the  possession  of  those  who  now  own  them  and  work  in  them? 
How  do  these  owners  and  workers  live  and  what  is  their  outlook  upon  the  rest 
of  the  world?" 


42R724 


vi  PREFACE  TO  THIRD  EDITION 

At  the  risk  of  making  a  still  greater  hodge-podge  I  have  ventured  to 
insert  some  generalizations  on  geologic  history  and  processes  such  as 
seem  to  explain  the  origin  and  govern  the  distribution  of  important 
minerals. 

These  new  suggestions  have  come  from  a  list  of  persons  and  experi- 
ences too  long  to  enumerate.  To  the  members  of  the  Mining  and  Metal- 
lurgical Society  of  America  and  of  the  American  Institute  of  Mining 
and  Metallurgical  Engineers;  to  many  members  and  officials  of  the  U.  S. 
Geological  Survey,  U.  S.  Bureau  of  Mines  and  the  Pan-American  Con- 
gress; to  many  managers,  lawyers  and  financiers;  and,  not  least,  to 
many  employes  and  workers  in  mines  I  offer  the  impression  they  have 
made  upon  me. 

Much  of  the  statistical  matter  has  been  prepared  and  edited  by  Mr. 
G.  A.  Roush,  editor  of  "Mineral  Industry." 

J.  R.  FINLAY 
QUOGUE,  LONG  ISLAND 

Sept.  12,  1920. 


PREFACE  TO  FIRST  EDITION 

THIS  book  is  the  result  of  experience  in  the  mining  business  covering 
some  twenty  years,  in  the  earlier  of  which  I  had  to  do  in  rapid  succes- 
sion with  such  diverse  operating  conditions  as  those  presented  by  Lake 
Superior  iron  mines,  gold  mining  in  Ecuador  and  Colorado,  and  lead 
mining  in  Idaho  and  Missouri.  The  profound  differences  in  methods 
imposed  by  natural  conditions  could  not  fail  to  impress  themselves  on 
one's  attention. 

Some  six  years  ago  a  discussion  started  by  Messrs.  T.  A.  Rickard 
and  W.  R.  Ingalls  of  the  Engineering  and  Mining  Journal  on  the  "Cost 
of  Mining"  attracted  considerable  discussion  from  mining  engineers 
throughout  the  world,  and  I  contributed  some  articles.  It  was  natural 
to  continue  the  investigation  of  the  subject.  In  1908,  at  the  suggestion 
of  Mr.  Ingalls,  I  undertook  to  prepare  some  more  extended  articles  for 
the  same  journal  with  a  view  of  rationalizing  the  subject  to  show  how 
the  natural  factors  inevitably  impose  certain  costs  that  sound  engineering 
must  recognize,  and  that  to  attempt  economies  unjustified  by  the  con- 
ditions is  the  rankest  extravagance. 

This  book  is  the  outgrowth  of  those  articles  and  to  a  lesser  extent  of 
some  lectures  given  at  Harvard  University  and  a  large  amount  of  dis- 
cussion and  correspondence.  The  subject  is  one  that  is  inherently  in- 
teresting to  mining  men  and  mining  engineers  and  it  seems  possible  that 
it  may  interest  a  somewhat  wider  field.  Those  who  are  interested  in 
fir  mcial  and  economic  developments  can  hardly  escape  some  contact 
with  the  mining  business. 

A  full  treatment  of  the  subject  would  be  encyclopedic,  but  no  attempt 
is  made  here  to  give  the  work  that  character.  I  have  merely  tried  to 
give  a  certain  perspective  of  the  business  in  coal,  iron,  lead,  zinc,  copper, 
gold,  and  silver,  concentrating  my  effort  largely  on  an  attempt  to  exhibit 
facts  in  their  proper  proportion.  The  principal  source  of  facts  is  the 
official  reports  of  mining  companies  which  are  not  in  some  fields  so  nu- 
merous as  could  be  wished,  and,  in  fact,  from  some  districts  are  not  to 
be  had  at  all.  The  best  and  most  numerous  reports  are  issued  by  copper, 
lead,  and  gold  mining  companies. 

In  the  coal  business,  reports  of  a  certain  kind  are  abundant  and  gene- 
ralized statistics  are  exceedingly  abundant,  but  little  is  to  be  had  in  the 
way  of  detailed  information  necessary  to  a  satisfactory  cost  analysis. 
Consequently,  the  chapters  on  coal  mining  are  more  general  than  those 
on  other  subjects;  but  while  a  detailed  treatment  of  this  immense  busi- 

vii 


viii  PREFACE  TO  FIRST  EDITION 

ness  would  require  a  volume  in  itself,  it  may  be  remarked  that  coal 
mining  is  the  simplest  form  of  the  industry  and  a  sketch  of  its  essential 
features  does  not  need  to  be  a  long  one. 

A  single  corporation  accounts  for  55  per  cent,  of  the  iron  output  of 
the  United  States,  and  at  the  same  time  its  reports  are  far  more  luminous 
than  those  of  any  other  concern  in  this  business.  Accordingly  much 
attention  is  given  to  the  results  and  statistical  history  of  the  United 
States  Steel  Corporation.  The  independent  companies  are  either  utterly 
secretive  or  give  only  financial  statements  that  do  not  yield  much  to 
analysis. 

The  discussion  of  lead  mining  covers  the  results  obtained  by  com- 
panies typical  of  the  conditions  under  which  80  per  cent,  of  the  American 
product  is  secured. 

In  zinc  mining  information  is  not  very  satisfactory,  but  it  is  possible 
to  give  some  idea  of  the  operating  conditions  under  which  some  80  per 
cent,  of  the  American  product  is  obtained. 

In  copper  mining  a  great  deal  of  detailed  information  is  to  be  had 
showing  results  in  a  fairly  satisfactory  way  in  districts  that  produce 
nearly  90  per  cent,  of  the  North  American  copper.  A  few  examples 
are  taken  from  the  outside  world. 

In  gold  and  silver,  the  United  States  is  not  pre-eminent  and  examples 
are  taken  rather  freely  from  all  parts  of  the  world. 

It  will  be  seen  that  the  work  deals  largely  with  results;  matters  of  an 
engineering  or  technical  nature  are  generally  left  out  even  to  the  extent 
of  ignoring  such  matters  as  the  assay  values  of  ores.  This  is  done  in 
order  to  make  the  conclusions  base  themselves  on  strictly  practical  and 
conservative  grounds.  It  happens  by  way  of  coincidence  that  this  vol- 
ume will  serve  as  a  kind  of  supplement  to  Mr.  H.  C.  Hoover's  work  on 
the  "  Principles  of  Mining,"  which  deals  with  the  processes  of  valuation, 
organization,  and  administration,  and  the  methods  used  in  mining  the 
more  precious  metals.  The  reader  will  find  in  Mr.  Hoover's  book  an 
outline  of  some  of  the  technical  problems  not  dealt  with  here. 

I  must  acknowledge  the  assistance  given  by  various  friends  in  the 
preparation  of  this  work.  Professor  H.  L.  Smyth  of  Harvard  University 
in  particular  has  aided  with  many  important  suggestions  and  is  respon- 
sible for  portions  of  Chapters  I  and  II.  Mr.  W.  R.  Ingalls,  editor  of 
the  Engineering  and  Mining  Journal,  has  kindly  allowed  me  to  republish 
from  the  " Mineral  Industry"  of  1908  his  important  study  of  the  cost  of 
"  Silver-Lead  Smelting,"  which  forms  the  whole  of  Chapter  XVI.  Mr. 
Raphael  Welles  Pumpelly  has  given  great  assistance  in  looking  over  many 
reports.  Messrs.  F.  W.  Bradley,  T.  A.  Rickard,  J.  Parke  Channing, 
Dr.  Douglas,  Courtlandt  E.  Palmer,  H.  M.  Chance,  George  S.  Rice, 
and  many  others  have  all  contributed  from  time  to  time  valuable  sug- 
gestions and  criticisms. 


PREFACE  TO  FIRST  EDITION  ix 

I  cannot  help  feeling  that,  while  all  of  the  material  in  this  book  is 
either  old  or  public  property  to  the  extent  of  being  known  to  at  least  a 
portion  of  the  profession,  there  is  nevertheless  something  new  in  it  in 
that  it  presents  a  view  of  the  economics  of  mining  on  a  grand  scale  and  in 
broad  outline.  It  does  not  seem  possible  that  a  mining  man  can  fail  to 
understand  my  meaning.  If  the  facts  are  right  the  book  is  right.  But  in 
the  great  range  of  facts  that  I  have  tried  to  look  into  many  things  are  more 
or  less  obscure  and  it  is  difficult  to  be  sure  that  my  information  is  au- 
thoritative. I  shall  be  greatly  obliged  if  the  readers  of  this  book  will 
point  out  errors  or  supply  information.  If  there  is  any  demand  for  it 
I  shall  be  glad  to  prepare  a  revised  edition  later,  filling  in  some  of  the 
shortcomings  of  the  present  one. 

J.    R.    FlNLAY. 

NEW  YORK,  September,  1909. 


JI. 
i/III. 


CONTENTS 

CHAPTER  PAGE 

JJx  PREFACE  TO  THIRD  EDITION v 

PREFACE  TO  FIRST  EDITION vii 

». . *""!.  THE  SOURCE  OF  POWER 1 

VALUE  OF  MINING  PROPERTY 10 

NATURE  AND  USE  OF  CAPITAL 31 

i  i/tV.  FACTORS  GOVERNING  VARIATIONS  OF  COST 46 

V.  PARTIAL  AND  COMPLETE  COSTS 62 

VI.  COAL 71 

VII.  COST  OF  MINING  COAL 92 

VIII.  THE    INDUSTRIAL    CLEARING    HOUSES    AND     STATISTICS    OF    IRON 

PRODUCTION 110 

IK.  LAKE  SUPERIOR  IRON — OLD  RANGES 123 

X.  COST  OF  MINING  LAKE  SUPERIOR  IRON  MESABI  RANGE  AND  U.  S.  STEEL  140 
XI.  OCCURRENCE,  PRODUCTION  AND  PROSPECTS  OF  COPPER  .......    171 

XII.  THE  SOUTHWEST  COPPER  FIELD 189 

XIII.  JEROME  AND  THE  PRE-CAMBRIAN 201 

XIV.  LAKE  SUPERIOR  COPPER  MINES 221 

XV.  BISBEE 248 

XVI.  THE  PORPHYRY  COPPERS 271 

XVII.  THE  NORTHWESTERN  COPPER  FIELD 311 

XVIII.  COPPER  MINES  IN  VARIOUS  DISTRICTS 328 

XIX.  LEAD 349 

XX.  SOUTHEAST  MISSOURI 356 

XXI.  SILVER-LEAD  MINING 376 

XXII.  THE  COST  OF  SILVER-LEAD  SMELTING 402 

XXIII.  ZINC  STATISTICS 413 

XXIV.  ZINC  MINING 421 

XXV.  GOLD  STATISTICS,  WARS  AND  PRICES 437 

XXVI.  OCCURRENCES  AND  PRODUCTION  OF  GOLD 448 

XXVII.  QUARTZ-PYRITE  GOLD  MINES 459 

XXVIII.  CRIPPLE  CREEK,  KALGOORLIE  AND  GOLDFIELD 490 

XXIX.  SILVER  MINING  AT  COBALT  AND  GUANAJUATO 507 

INDEX.  .    523 


XI 


THE  COST  OF  MINING 

CHAPTER  I 

THE  SOURCE  OF  POWER 

THE  ECONOMIC  FUNCTION  OF  MINERALS — MECHANICAL  POWER  REQUIRES  ORGANIZA- 
TION FOR  ITS  UTILIZATION ILLUSTRATIONS  FROM  THE  EXPERIENCE  OF  THE  GREAT 

WAR — IMPOSSIBILITY  OF  INDUSTRIAL  NATIONS  RETURNING  TO  THEIR  FORMER  CONDI- 
TION AND  IDEAS — INDUSTRIAL  POWER  is  TRANSMUTABLE  INTO  MILITARY  POWER — 
ECONOMIC  PREPONDERANCES  IN  THE  ANGLO-SAXONS 

The  Source  of  Power. — The  value  of  minerals  comes  largely  from 
the  production  of  mechanical  power.  The  energy  lies  in  coal  and 
chemicals;  the  application  of  that  energy  is  obtained  through  the 
use  of  metals.  Thus  practically  all  mining  contributes  to  the  same 
ultimate  purpose.  The  usefulness  of  power  in  ministering  to  human 
needs  and  desires  makes  it  the  most  potent  form  of  wealth;  and  its 
utilization  is  the  essence  of  that  civilization  which  we  term  "modern." 
The  traditional  objects  of  mining  enterprise  that  are  celebrated  in 
history  and  romantic  literature,  gold,  silver  and  precious  stones,  seem 
to  be  an  exception  to  this  generalization;  if  so,  they  are  merely  an 
exception  that  proves  the  rule  and  an  illustration  of  the  new  elements 
that  have  been  brought  into  human  life.  These  materials  are  either 
ornaments,  a  form  of  the  wealth  that  may  be  obtained  through  the 
possession  of  power,  or  they  serve,  when  used  as  money,  as  a  kind  of 
lubricant  in  the  engine  of  production  and  thus  after  all  participate  in 
its  functions.  Thus  mining  may  reasonably  be  described  as  the 
basis  of  the  modern  economic  structure  and  this  has  long  been  evident 
to  those  who  have  given  the  matter  attention;  but  it  is  to  be  doubted 
whether  the  great  public  in  the  world  at  large  has  ever  given  this  fact 
and  its  possible  consequences  the  attention  that  it  really  demands. 
The  World  War  which  has  just  been  brought  to  a  close  has  done  more 
to  arouse  a  public  perception  of  the  political  and  social  implications  that 
lie  in  the  possession  of  mineral  resources  and  the  art  of  utilizing  them 
than  the  sum  total  of  really  more  important  but  less  spectacular 
events  that  have  gone  before.  This  perception  is  not  improbably  the 
major  development  of  this  great  political  upheaval  and  it  may  have  a 
decided  influence  on  the  mining  industry  for  the  future. 

The  manner  in  which  the  utilization  of  the  powers  that  lie  in  the 
crust  of  the  earth  affects  the  social  and  political  organization  of  mankind 
is  indicated  by  some  extracts  from  an  address  on  "  Industrial  Energy  as 
a  Military  Weapon"  given  before  the  Mining  and  Metallurgical  Society 
of  America  in  1915.  Although  most  of  the  factors  dwelt  upon  in  these 

1 


COST  OF  MINING 

paragraphs  i'e:  inimely  better  understood  now  than  they  were  when 
the  article  was  written,  the  essential  considerations  will  probably  be 
brought  out  more  vividly  by  quoting  part  of  this  address  than  by 
any  new  discussion  that  I  might  now  write. 

"At  the  beginning  of  the  war  I  believed  that  industrial  energy  would  prove 
to  be  the  decisive  factor  in  the  struggle,  and  that  this  energy  might  be  fairly  rep- 
resented by  the  use  and  production  of  coal  and  steel.  Part  of  this  proposition  is 
now  recognized  by  the  public;  the  other  part  is  not.  It  is  now  seen  that  the 
nations  of  Continental  Europe  that  are  facing  Germany,  namely,  France,  Russia, 
and  Italy,  are  no  match  for  Germany  in  the  production  of  the  necessary  equip- 
ment and  munitions  for  fighting.  I  argue  that  it  is  equally  probable  that  the 
whole  combination  of  the  Allies,  including  England,  is  deficient  in  the  capacity 
for  organizing  and  for  utilizing  equipment.  I  am  disposed  to  believe  that  the 
second  element  is  more  important  than  the  first,  because  it  requires  time  to  de- 
velop. This  proposition  is  based  on  the  supposition  that  military  success  arises 
from  the  same  kind  of  development  as  industrial  success.  It  will  take  some  time 
longer  to  prove  this. 

"The  idea  is  abroad  that  Germany  may  be  conquered  by  the  Allies  if  the  latter 
will  buy  enough  copper  and  other  munitions.  The  reality  is  that  the  buying  of 
supplies  is  a  comparatively  insignificant  part  of  the  problem.  To  take  an  in- 
dustrial comparison,  let  us  suppose  that  the  plants  of  the  United  States  Steel 
Corporation  were  supplied,  complete,  to  Russia,  without  the  organization  as  it 
exists  today.  What  use  could  Russia  make  of  them? 

"I  do  not  mean  to  imply  that  the  individual  Russian  is  necessarily  inferior  as 
a  workman,  or  as  a  man,  to  the  individual  American.  That  is  one  of  the  difficul- 
ties in  understanding  this  present  situation.  Each  of  the  great  nations  and  races 
of  mankind  is  able  to  furnish  human  material  that  can  compete  on  even  terms 
with  that  of  any  other  nation.  But  I  think  you  will  recognize  quickly  that  it 
would  take  the  Russians  many  years  to  make  any  adequate  use  of  the  plants  of 
the  United  States  Steel  Corporation.  It  is  hardly  worth  while  to  go  into  details. 
The  operation  of  those  plants,  including  mines,  steamships,  railroads,  rolling 
mills,  and  factories  of  all  kinds,  requires  the  development  of  a  vast  amount  of 
specialized  labor;  it  also  requires  a  great  deal  more  than  that,  namely,  a  slowly 
developed  and  highly  organized  control.  The  plans  and  the  execution  of  them 
must  be  tested  by  competition  with  rivals.  The  organization  must  know  the 
fields  in  which  the  products,  when  made,  can  be  sold  and  utilized.  It  would  be 
easy  to  dwell  on  this  subject  a  long  time,  but  I  think  you  will  soon  conclude  that 
the  plants  of  the  United  States  Steel  Corporation  would  never  reach  anything 
like  the  effectiveness  in  Russia  which  they  have  in  this  country,  until  the  Russian 
nation  is  developed  industrially  to  such  an  extent  that  it  can  meet  such  an  organ- 
ization on  even  terms.  In  other  words,  other  industries,  all  of  the  industries  in 
the  country,  in  fact,  would  have  to  be  developed  in  a  substantially  equivalent 
manner.  This  certainly  cannot  be  accomplished  over  night,  nor  during  the 
probable  continuance  of  any  war.  It  is  a  matter  that  requires  nothing  short  of 
the  industrial  organization  and  development  of  the  nation.  A  generation,  or 
even  two  generations,  is  a  short  time  for  such  an  accomplishment. 

"Dropping  this  subject  for  a  moment,  it  seems  to  me  that  we  should  discuss 
fundamentals  a  little. 


THE  SOURCE  OF  POWER  3 

"One  such  fundamental  is  that  our  political  ideas  and  most  of  our  beliefs 
and  prejudices  date  from  the  time  when  the  steam  engine  was  unknown.  I 
believe  that  economic  changes  have  taken  place  in  the  leading  civilized  nations 
without  producing,  as  yet,  the  inevitable  change  in  political  and  social  ideas.  We 
are  facing  facts  which  we  do  not  recognize,  or  at  least,  which  are  not  recognized 
by  the  public.  We  go  through  forms  of  thought  and  attach  ourselves  to  certain 
prejudices  that  will  not  stand  the  analysis  of  modern  actualities.  Some  of  our 
political  sentiments  are  like  the  buttons  on  a  dress  coat,  which  were  put  there 
originally  to  attach  swords  to,  because  gentlemen  wore  swords,  and  the  dress 
coat  is  the  coat  of  a  gentleman;  but  there  is  no  longer  any  actuality  in  the  sword 
as  a  weapon,  either  social  or  military.  The  fact  that  we  like  to  see  buttons  on  a 
dress  coat  is  a  mere  sentiment  which  does  not  change  in  the  least  the  relative 
efficiency  of  the  sword  and  its  successor,  the  revolver. 

"What  changes  of  a  political,  social,  and  religious  nature  are  to  take  place  I 
do  not  know.  One  thing  that  the  world  is  learning  beyond  doubt,  is  that  individ- 
ual effort,  no  matter  how  well  developed  the  individual,  is  no  longer  a  match  for 
corporate  effort.  This  is  a  lesson  that  the  Frenchman  and  the  Russian  must  be 
learning.  We  in  the  United  States  have  learned  it,  but  we  hardly  realize  that  we 
have  learned  it. 

"Let  me  try  to  explain  what  I  mean:  There  are  certain  efforts  that  cannot  be 
accomplished  by  the  individual,  that  require  a  combination  of  people  such  as 
was  not  contempleted  at  the  time  when  our  government  was  established.  We  can 
see  plenty  of  examples  in  the  mining  industry,  and  plenty  more  in  the  railroad 
business.  In  fact,  we  all  know  that  the  business  of  our  country  in  general  has 
reached  a  point  where  the  large  corporation  is  absolutely  indispensable.  Con- 
sider, for  instance,  the  Utah  Copper  Company.  Nothing  but  failure  of  such  an 
undertaking  could  possibly  have  rewarded  the  efforts  of  any  man  or  any  group  of 
men  in  this  country  100  years,  or  even  20  years,  ago.  Look  at  the  organizations 
required  to  conduct  the  railroad  business  of  this  country.  The  railroads  all 
started  in  a  more  or  less  individualistic  manner.  A  little  railroad  was  built  from 
New  York  to  Harlem;  another  from  Harlem  to  Poughkeepsie;  a  third  from  Pouhg- 
keepsie  to  Albany;  a  dozen  pieces  of  railroad  were  constructed  to  form  a  patch- 
work system  of  travel  between  New  York  and  Chicago.  The  progress  of  our 
industry  soon  made  it  plain  that  such  a  system  was  absurdly  less  efficient  than 
it  might  be;  consequently  these  little  roads  wer.e  thrown  into  one  system,  and 
operated  by  one  head,  so  that  freight  and  passengers  could  be  carried  through  with 
less  expense  and  delay. 

"My  belief  is  that  the  fundamental  desire  of  the  human  race  is  to  secure  greater 
economy  in  the  production  of  the  necessities  and  luxuries  of  life.  Any  political 
system  or  any  social  idea  which  interferes  with  that  economy  will  go  to  the  wall, 
will  be  defeated  and  discarded.  The  demand  for  efficiency  will  finally  triumph 
over  any  preconceived  prejudices  regarding  personal  and  political  liberty.1 

1This  statement  has  been  a  great  disappointment  to  many  persons  who  have 
written  to  me  about  it,  but  perhaps  they  have  not  realized  fully  what  was  meant. 
Let  me  explain  my  point  of  view  by  an  example.  Schoolcraft,  writing  about  the 
mining  industry  of  Southeast  Missouri  in  1819,  just  100  years  ago,  gives  statistics 
about  the  number  of  men  employed  and  the  amount  of  lead  they  produced.  Com- 
paring this  information  with  the  statistics  of  the  present  day  we  find  that  in  1919  each 
man  produces  200  pounds  of  lead  per  day  against  20  in  1819;  ten  times  as  much. 


4  THE  COST  OF  MINING 

"We  were  all  born  while  a  revolution  was  going  on  in  human  affairs,  and  we 
shall  die  before  that  revolution  ends.  This  revolution  is  a  fundamental  accom- 
plishment, such  as  the  human  race  is  not  likely  to  repeat  again  for  thousands 

The  natural  difficulties  to  be  faced  in  the  way  of  depth,  water  to  be  pumped,  etc.  are 
much  greater  now  than  they  were  then.  The  industrial  changes  (and  their  effect  on 
social  organization)  that  have  brought  about  these  results  can  hardly  be  illustrated 
better  than  by  Schoolcraft's  description  of  a  smeltery.  He  gravely  estimates  its  cost, 
at  $40!  A  modem  smeltery  in  the  same  district  costs  not  less  than  $1,000,000.  The 
amount  of  capital  required  to  enter  the  lead  business  as  an  independent  operator  in 
1819  was  such  that  any  miner  now  working  in  the  mines  could  afford  it  if  he  could  trans- 
port his  present  resources  back  to  that  period.  At  that  time  there  were  scores,  if  not 
hundreds,  of  independent  operators;  now,  with  the  immensely  increased  output,  the 
number  of  operators  has  been  reduced  to  four  corporations.  The  liberty  of  private 
enterprise  has  disappeared.  The  population  of  the  district  has  no  opportunity  to 
earn  a  livelihood  in  lead  mining  other  than  to  work  for  these  concerns.  What  cur- 
tailment of  liberty  could  be  more  vital  than  this? 

"If  we  are  to  consider  this  situation  as  a  political  and  social  matter  we  have  to 
weigh  two  questions;  (1)  Is  a  return  of  the  conditions  which  gave  so  much  personal 
liberty  in  1819  desirable?  (2)  Is  it  possible? 

"As  to  the  desirability  of  it  we  may  point  to  the  fact  that  the  gross  output  in  1819 
out  of  which  the  lead  miner  could  pay  himself  and  seek  return  on  his  capital  was  20 
pounds  of  lead.  Today  his  wages,  without  any  capital  yield,  him  the  equivalent  of 
70  pounds.  By  surrendering  his  liberty  to  be  an  operator,  he  acquires  another  kind 
of  liberty — that  of  having  more  to  live  on;  better  food,  better  clothes,  more  enlighten- 
ment, greater  freedom  of  travel,  a  wider  range  of  experience.  There  is  such  a  thing 
as  blind  worship  of  catchwords.  The  word  liberty  is  often  used  as  a  kind  of  fetish 
and  anyone  who  seems  willing  to  curtail  it  is  apt  to  be  denounced  as  a  malignant 
heretic.  But  we  are  actually  surrounded  by  innumerable  limitations  of  liberty  and 
the  whole  process  of  organization,  cooperation  and  law  is  one  of  defining  and  estab- 
lishing them.  The  one  great  liberty  which  may  be  obtained  from  suffering  such  re- 
straints is  the  escape  from  economic  misery.  Thus  I  doubt  if  the  Missouri  miner 
entertains  any  real  desire  to  exchange  his  situation  of  today  with  that  of  a  hundred 
years  ago.  If  it  came  to  that  he  would  reach  the  practical  matter  of  weighing  the 
liberties  he  has  gained  against  those  he  has  lost;  and,  sentiments  to  the  contrary  not- 
withstanding, the  value  of  those  liberties  is  measured  in  plain  dollars  and  cents,  or  in 
pounds  of  lead. 

"  (2)  Whatever  the  desirability  of  the  old  conditions,  a  return  to  them  is  im- 
possible. They  do  not  exist. 

"Thus  I  think  we  may  discern  that  in  many  ways  the  great  industrial  forces 
that  affect  political  and  social  conditions  act  like  the  forces  of  nature  itself.  He 
who  embarks  his  capital  in  a  stage,  coach  to  compete  with  railroads,  believing  that 
railroad  corporations  are  an  improper  thing,  is  as  sure  to  be  hurt  financially  as  he 
would  be  sure  to  be  hurt  physically  if  he  stepped  out  of  a  sixth-story  window  believing 
that  the  law  of  gravity  is  an  improper  thing.  It  seems  absurd  to  argue  about  such 
great  forces  as  matters  of  right  and  wrong;  he  is  right  who  understands  them;  he  is 
wrong  who  does  not  understand  them.  I  suppose  we  may,  as  an  intellectual  exercise, 
picture  to  ourselves  a  return  to  the  economic  conditions  of  a  hundred  years  ago,  but 
to  picture  it  as  something  that  people  would  consent  to,  seems  a  mere  extravagance. 
It  would  involve  the  starvation,  or  at  least  the  migration,  of  scores  of  millions  of  peo- 
ple, make  the  great  cities  of  the  world  impossible,  annihilate  the  conveniences  that  the 
most  civilized  people  have  grown  to  regard  as  necessities  and  alter  profoundly  the 
relative  power  and  influence  of  nations. 


THE  SOURCE  OF  POWER  5 

of  years.  It  is  something  that  we  are  all  familiar  with,  but  which  we  do  not 
think  very  much  about.  It  is  the  conquest  of  natural  energy  by  the  human 
brain. 

"One  hundred  and  fifty  years  ago,  men  had  no  resources  for  accomplishing 
their  work  except  the  muscular  power  of  men  and  animals,  with  a  little  crude  de- 
velopment of  wind  and  water  power.  Now  we  use  our  hands  and  our  brains  to 
direct  forces  scores  of  times  more  energetic.  The  result  is  prodigious  and  it  is 
causing  a  complete  rearrangement  of  our  mode  of  life.  It  is  causing  us  to  look 
upon  nature  itself  in  a  different  way,  and  it  is  altering  profoundly  the  relations 
between  men  and  between  nations. 

"The  source  of  this  power  at  present  is  largely  coal.  The  power  of  coal  is 
developed  through  machines  made  of  metals.  This  is  not  so  much  a  chemical  or 
material  fact,  as  it  is  a  human  fact.  The  utilization  of  this  power  is  made  pos- 
sible only  by  the  development  of  human  organizations  to  match  it.  A  locomotive 
is  no  more  the  machine  that  accomplishes  the  work  of  a  railroad  than  a  statue 
is  a  living  man.  You  cannot  use  a  locomotive  without  a  railroad,  and  you  cannot 
have  a  railroad  without  work  for  it  to  do;  you  cannot  have  work  for  it  without  big 
industries.  In  short,  you  cannot  have  first-class  mechanical  service  and  efficiency 
except  in  a  highly  developed  industrial  nation.  The  mere  existence  of  power- 
driven  industry  on  a  large  scale  proves  in  itself  that  a  country  which  supports  it 
possesses  a  different  and  more  efficient  organization  than  a  country  which  does 
not  support  it. 

"When  I  learned  some  years  ago  that  it  took  10  or  15  Hindoo  coolies  to  ac- 
complish the  work  of  one  of  our  miners  in  this  country,  I  could  not  understand  it. 
The  difference  seemed  preposterously  great.  It  was  all  the  more  extraordinary 
because  it  occurred  in  a  mine  just  as  thoroughly  equipped  with  machinery  as  the 
mines  of  this  country.  The  reasoning  I  have  offered  you  is  an  attempt  to  explain 
it.  Industrial  efficiency  cannot  exist  in  a  population  that  neither  understands 
nor  demands  it. 

"An  adequate  explanation  must  cover  the  improvements  that  are  steadily 
made  in  our  business.  I  know  of  mines  in  which  each  man  is  producing  twice  as 
much  as  he  produced  10  years  ago,  without  working  any  harder,  and  without  any 
improvements  in  or  additions  to  the  machinery.  I  am  satisfied  that  industrial 
efficiency  means  nothing  less  than  national  effort,  produced  by  slow  growth,  by* 
the  habit  of  cooperation,  and  by  a  widespread  recognition  of  the  value  of  coopera- 
tion and  belief  in  it. 

"Thus  we  come  to  understand  that,  while  it  is  as  true  as  it  ever  was  that  the 
Frenchman  or  the  Russian  is  just  as  good  a  man,  as  an  individual,  as  the  American 
or  the  German,  the  possibility  is  open  that  in  an  industrial  sense  the  French 
nation  or  the  Russian  nation  may  not  be  one-quarter  as  efficient  as  the  Americans 
or  the  Germans. 

"It  is  a  fact  not  generally  recognized  that  today  there  are  only  three  nations 
in  which  mechanical  industry  is  widespread,  namely,  the  United  States,  the  Brit- 
ish Empire,  and  Germany.1  It  is  not  fair,  of  course,  to  say  that  industry  has 
not  been  developed  in  other  countries,  but  these  nations  are  so  far  ahead  of  any 
rivals  that  they  are  very  distinctly  in  a  class  by  themselves.  These  three  nations 
produce  about  86  per  cent,  of  the  coal  of  the  world,  and  undoubtedly  operate 
1  This  meant  the  Teutonic  group  as  it  was  in  the  war. 


6  THE  COST  OF  MINING 

an  equally  large  percentage  of  its  machinery.  It  is  a  remarkable  fact — it  may  be 
an  accident,  but  still  it  is  a  fact  that  all  of  these  nations  are  predominantly  Teu- 
tonic. It  may  be  an  accident  that  this  race  of  men  happened  to  gain  possession 
of  the  more  important  territories  that  contained  coal;  but  whether  an  accident  or 
not,  it  makes  no  difference  as  to  the  importance  of  the  developments  that  have 
come  from  it.  It  happens  that  one  of  these  nations  is  the  most  highly  developed 
military  nation  in  the  world.  The  other  two,  while  developed  industrially  quite 
as  highly  as  Germany,  happen  to  be  about  the  least  military  nations  of  the  world. 
In  my  judgment,  the  unmilitariness  of  England  and  the  United  States  is  due  to 
one  cause  only,  namely,  their'  isolation,  their  freedom  from  enemies  capable  of 
easily  attacking  them.  If  these  nations  felt  compelled  to  do  so,  they  could  de- 
velop enormous  military  powers;  but  we  may  also  believe,  from  our  available 
sources  of  reasoning,  that  the  development  of  such  military  power  will  take  a 
long  time  and  can  be  accomplished  only.by  a  thorough  political  and  social  organi- 
zation on  terms  of  military  efficiency." 

The  statistics  upon  which  these  remarks  were  based  are  no  longer  of 
sufficient  interest  to  be  quoted  in  full.  The  essence  of  them  was  that 
after  their  occupation  of  Belgium  and  Northern  France  the  Germans 
held  in  their  control  in  1915  a  manufacturing  energy,  so  far  as  that  could 
be  measured  by  the  consumption  of  coal  and  steel,  equal  to  more  than 
six  times  that  of  all  the  Allies  on  the  continent;  380,000,000  tons  of  coal 
against  45,000,000  tons  for  France,  Russia  and  Italy  combined;  that 
they  even  held  a  preponderance  over  the  entire  group  of  Allies  including 
Great  Britain.  That  Empire  contributed  industrial  energy  represented 
by  257,000,000  tons  of  coal,  giving  the  Allies  immediate  resources  of  300, 
000,000  tons.  In  iron  production  the  Germans  controlled  plants  with  a 
capacity  of  some  ^6,000,000  metric  tons  a  year,  while  that  of  the  Allies 
was  apparently  reduced  to  about  14,000,000  tons.  It  is  probable  that 
both  groups  were  unable  to  maintain  the  efficiency  of  their  plants  on 
account  of  the  shortage  of  labor;  but  which  side  suffered  most  in  this 
respect  is  not  yet  clear. 

"Some  further  interesting  comparisons  may  be  made.  In  the  consumption 
of  fuels,  the  United  States  is  easily  the  foremost  nation,  consuming  an  average 
of  over  6  tons  per  capita.  England,  Belgium,  and  Germany  seems  to  be  about  on 
the  same  level,  with  the  consumption  of  approximately  4  tons  per  capita. 

It  is,  I  believe,  conceded  by  all  observers  that  the  industrial  output  per  man  is 
greater  in  the  United  States  than  in  any  other  country;  probably  about  in  pro- 
portion to  the  consumption  of  coal,  that  is  to  say,  the  use  of  mechanical  energy. 

A  review  of  the  consumption  of  fuels  by  the  leading  industrial  nations  shows 
some  interesting  figures.  Russia  is  apparently  in  about  the  same  condition  that 
the  United  States  was  in  1850.  Wood  is  still  largely  used  as  fuel  for  locomotives, 
just  as  it  was  in  this  country  at  that  time.  The  consumption  of  mineral  fuel  is 
about  Y±  ton  per  capita,  as  it  was  in  the  United  States  in  1850.  In  the  progress 
of  the  United  States  from  1850  to  1918,  we  find  that  today  we  are  using  25  times 
as  much  coal  per  capita  as  we  wsre  then;  and  an  estimate  of  the  wealth  per  capita 


THE  SOURCE  OF  POWER  7 

as  given  in  the  World's  Almanac,  shows  $300  in  1850  and  $1785  in  1918.  If  the 
productivity  of  a  nation  can  be  measured  by  this  wealth,  it  would  seem  that  the 
producing  capacity  of  an  American  citizen  is  about  six  times  that  of  a  Russian. 
It  seems  also  that,  by  the  same  comparison,  France  is  now  only  as  far  advanced 
industrially  as  the  United  States  was  about  1875.  This  certainly  does  not  mean 
that  specialized  industries  are  not  fully  as  well  developed  in  France  as  in  this 
country.  What  it  probably  does  mean  is  that  the  mass  energy  is  much  less. 
France  consumes  only  about  1.6  tons  per  capita,  which  I  think  almost  certainly 
means  that  most  of  the  French  people  are  at  work  on  farms  and  small  shops  and 
not  in  the  factories.  They  work  more  with  their  hands  and  less  with  machinery." 

The  power  that  lay  in  the  industrial  resources  thus  outlined  was 
abundantly  demonstrated  by  the  final  event  of  the  war.  The  vast 
populations  of  eastern  Europe,  meagerly  developed  industrially,  were 
unable  to  sustain  a  thorough  military  organization.  It  is  probable  that 
they  ruined  their  own  armies  by  making  those  armies  greater  than  their 
resources  could  provide  for:  the  result  was  hardship,  starvation,  divided 
councils,  discouragement  and  finally  a  collapse  of  the  national  morale. 
The  Germans  continued  to  make  decided  headway  until  they  were  finally 
overmatched  by  the  accretion  to  the  Allies  of  all  the  industrial  powers  of 
the  western  nations.  Then  in  their  turn,  the  less  highly  organized 
nations  of  the  Teutonic  group  finally  collapsed  one  after  the  other.  The 
collapse  of  each  nation  took  the  form  of  a  social  and  political  explosion; 
their  organizations  no  longer  stood  the  strain. 

The  industrial  power  of  the  United  States  stimulated  to  the  full  by 
the  war  reached  proportions  far  greater  even  than  I  have  indicated. 
The  combined  prduction  of  anthracite,  bituminous  coal  and  natural  gas 
in  1918  gave  the  country  fuel  resources  equal  to  775,000,000  tons  of 
coal,  in  all  probability  equal  to  or  greater  than  the  production  of  all  the 
rest  of  the  world  put  together;  this  in  addition  to  putting  3,700,000 
men  into  the  army  as  well  as  sending  a  considerable  number  of  persons 
to  the  war  in  civil  capacities.  The  steel  production  of  this  country  like- 
wise ran  up  to  an  average  of  45,000,000  metric  tons  for  each  of  the  years, 
1916,  1917,  and  1918,  again  equal  to  that  of  the  rest  of  the  world. 

Comparisons  are  said  to  be  odious;  and  those  who  draw  attention  to 
such  statistics  as  these  are  sometimes  accused  of  strutting  and  bragging 
in  the  interest  of  their  own  country.  I  wish  to  disclaim  any  motive 
whatever  except  to  express  the  facts.  That  great  political  influences 
accompany  these  facts  is,  I  believe,  a  truth  which  can  be  little  affected 
either  by  arrogance  or  humility.  Arrogance  is  of  course  a  form  of  stu- 
pidity and  it  is  within  the  powers  of  stupidity  to  injure  or  destroy 
the  prosperity  and  prestige  of  a  nation,  but  this  is  a  matter  that  has  noth- 
ing to  do  with  statistics.  It  is  a  fact  that  the  United  States  is  today, 
and  promises  to  continue  indefinitely  to  be,  the  greatest  producer, 
user  and  owner  of  power  of  all  the  nations  of  the  earth.  This  power  is 


8  THE  COST  OF  MINING 

not  by  any  means  a  fanciful  or  hopeful  appraisal  of  military  strength, 
but  an  actual  measure  of  dynamic  force,  which  may  be  transmuted  into 
military  energy  in  due  proportion;  but  that  is  almost  a  negligible  factor 
in  the  value  of  it. 

If  we  look  upon  the  English-speaking  peoples  as  an  almost  homogene- 
ous group,  between  the  parts  of  which  national  distinctions  are  to  be  of 
minor  importance — a  view,  by  the  way,  that  seems  rational  and  desir- 
able— we  shall  find  that  the  economic  preeminence  which  they  enjoy 
at  present  seems  guaranteed  for  the  future  by  a  singular  combination  of 
the  factors  to  which  I  have  been  calling  attention.  The  group  occupies 
only  an  insignificant  fraction  of  the  area  of  Europe  and  constitutes  only 
one-tenth  of  the  population  of  that  continent,  but  the  British  Isles  enjoy 
advantages  in  the  way  of  coal  resources  and  a  strategic  position  for  trade 
that  gives  them  an  importance  altogether  out  of  proportion  to  these 
figures.  They  inhabit  or  control  outside  of  Europe  territories  of  about 
18,000,000  square  miles,  one-third  of  the  land  surface  of  the  world, 
approximately  150  times  the  area  of  the  British  Isles.  These  English- 
speaking  people  actually  occupy  the  whole  continent  of  Australia,  nine- 
tenths  of  North  America,  the  temperate  regions  of  South  Africa,  besides 
exerting  a  political  control  over  the  major  part  of  Africa  and  the  southern 
part  of  Asia.  Political  control  over  areas  already  densely  populated  is 
perhaps  an  advantage  in  the  way  of  promoting  and  maintaining  trade, 
but  it  is  only  a  shadowy  and  generally  a  temporary  national  asset ;  certainly 
not  to  be  compared  in  value  with  the  actual  ownership  of  lands.  The 
areas  so  owned  and  settled  by  white  English-speaking  people  in  America, 
Australia,  New  Zealand  and  Africa  amount  to  not  less  than  three  times 
the  whole  area  of  Europe,  nearly  a  hundred  times  that  of  the  British 
Isles.  Moreover  these  lands  are  actually  the  best  that  are  to  be  found, 
predominantly  temperate  in  climate,  fertile  in  soil,  and  apparently 
supplied  with  mineral  resources  even  out  of  proportion  to  their  area. 
Surely  to  defend  and  secure  this  property  to  the  best  and  permanent  use 
of  the  people  who  own  it  is  a  policy  that  seems  reasonable  enough  and 
important  enough.  If  the  League  of  Nations  now  being  launched  does 
not  prove  workable  a  league  of  the  Anglo  Saxons  alone  would  seem  able 
to  take  its  place  and  guarantee  what  any  other  league  might  guarantee ! 
It  is  an  old  saying  that  "  Charity  begins  at  home."  We  have  great 
resources.  One  great  advantage  possessed  by  the  Anglo  Saxons  is  plenty 
of  room.  We  are  not  oppressed  by  the  terrors  of  over-population.  Why 
encourage  that  terror  and  bring  it  nearer  by  hastening  the  growth  of 
population  by  promoting  immigration  into  these  vast  areas?  We  talk 
sometimes  of  " undesirable  neighbors."  Is  not  too  great  a  multitude  of 
neighbors  of  whatever  kind  essentially  undesirable? 

At  any  rate  let  us  take  some  measure  of  the  mineral  production  and 
resources  of  this  group  of  people.  One  purpose  in  calling  attention  to 


THE  SOURCE  OF  POWER  9 

this  fact  is  to  show  that  a  discussion  of  the  mining  industry  of  the  English- 
speaking  peoples  is  in  most  cases  to  cover  a  preponderance  of  the  world's 
output  and  will  therefore  indicate  the  preponderating  conditions  of  the 
world's  industry.  It  is  particularly  necessary  and  desirable  for  the  pur- 
poses of  this  volume  that  this  happens  to  be  the  case;  for  the  disturbances 
of  the  past  five  years  have  almost  eliminated  statistical  information  from 
a  large  part  of  the  rest  of  the  world. 

The  following  figures  show  the  comparative  status  of  the  English- 
speaking  peoples  in  1918,  with  regard  to  the  leading  mineral  and  metal- 
lurgical industries. 

PIG  IRON  (METRIC  TONS) 

Estimated  World's  Production 71,166,000  tons 

United  States 39,678,000  tons— 56  per  cent, 

British  Empire 10,612,000  tons — 15  per  cent. 


Combined 50,290,000  tons — 71  per  cent. 

COPPER  (METRIC  TONS) 

Estimated  World's  Production 1,395,200  tons 

United  States 848,200  tons — 61  per  cent. 

British  Empire 106,400  tons—  8  per  cent. 


Combined 954,600  tons — 69  per  cent. 

COAL  (METRIC  TONS) 

Estimated  World's  Production 1,334,500,000  tons 

United  States 616,556,000  tons — 46  per  cent. 

British  Empire 231,855,000  tons — 17  per  cent. 


Combined 848,411,000  tons — 63  per  cent. 

GOLD  (DOLLARS) 

Estimated  World's  Production $372,518,400 

United  States 68,493,500—18  per  cent. 

British  Empire 250,824,000 — 67  per  cent. 


Combined 319,317,500 — 85  per  cent. 

SILVER  (FINE  OUNCES) 

Estimated  World's  Production 177,453,300  oz. 

United  States 67,879,200  oz.— 38  per  cent. 

British  Empire 35,625,100  oz. — 20  per  cent. 


Combined 103,504,300  oz.— 58  per  cent. 

LEAD  (METRIC  TONS) 

Estimated  World's  Production 1,307,000  tons. 

United  States 499,600  tons — 41  per  cent. 

British  Empire 227,900  tons — 19  per  cent. 


Combined ,,,,,,,,,,       727,500  tons — 60  per  cent. 


CHAPTER  II 

VALUE  OF  MINING  PROPERTY 

POPULAR  TENDENCY  TO  TAKE  FRAGMENTARY  VIEW  OF  MINING  INDUSTRY — ITS  EXTENT 

AND  GROWTH  IN  THE  UNITED  STATES BASIS  OF  VALUATION  OF  MINES — AVERAGE 

PRICES  AND  COSTS CONCURRENT  FLUCTUATION  OF  COSTS  WITH  PRICES — THE 

NORMAL  PROFIT  OF  MINES  ESTABLISHED  BY  COMPETITION  WITH  ONE  ANOTHER, 
PROBABLY  AS  A  PROPORTION  OF  THE  GROSS  OUTPUT TYPES  OF  MINING  PROPER- 
TIES— NATURE  OF  A  MINING  INVESTMENT — KNOWN  AND  UNKNOWN  ORE  RESERVES 
— DEPENDENCE  OF  MINES  ON  CONTINUED  DEVELOPMENT — CALCULATION  OF 
VALUES  OF  MINES  FROM  KNOWN  FACTORS. 

In  this  volume  I  propose  to  discuss  the  business  of  mining  on  broad 
lines.  Most  people  who  connect  themselves  with  this  most  important 
industry  are  interested  only  in  certain  sections  of  it,  even  to  a  point  of 
almost  forgetting  that  there  is  a  mining  business  outside  of  their  own 
particular  field.  People  who  have  been  engaged,  for  instance,  in  gold 
mining  are  apt  to  think  of  coal  and  iron  mining  as  a  different  business. 
We  find  people  talking  about  mining  stocks  in  an  unjustifiably  restricted 
sense.  A  certain  group  will  think  of  them  as  referring  to  shares  in  highly 
speculative  precious  metal  enterprises,  and  will  not  even  consider  as 
coming  within  their  range  such  really  stable  and  valuable  securities  as 
those  of  the  Homestake,  Treadwell,  or  of  the  many  great  gold-mining 
enterprises  controlled  by  British  capital.  The  public  does  not  know  that 
the  class  of  speculative  gold  and  silver  mines  which  depend  on  the  dis- 
covery of  an  occasional  bonanza,  which  is  very  likely  to  be  exploited 
much  more  vociferously  in  the  newspapers  and  on  certain  stock  exchanges 
than  its  value  warrants,  forms  only  an  insignificant  fraction  of  the  mining 
business.  Such  properties  really  depend  more  on  psychology  than  on 
values.  It  is  instinctive  with  a  certain  fraction  of  the  human  race  to 
be  enormously  attracted  by  the  glitter  of  gold. 

Another  section  of  the  mining  public  is  that  which  devotes  itself  to 
speculation  in  copper  shares,  ignoring  on  the  one  hand,  as  too  speculative, 
ventures  in  gold,  silver,  or  lead,  and  on  the  other  hand,  as  too  slow, 
ventures  in  coal,  iron,  or  building  material.  We  have  a  very  much 
larger  group  of  people  interested  in  coal  and  iron,  who  look  upon  their 
business  as  being  more  allied  to  manufacturing  and  devoid  of  the  specula- 
tive element  that  is  supposed  to  enter  so  largely  into  the  mining  business. 

Extent  and  Growth  of  Mining  Business. — As  a  matter  of  fact  the 
real  mining  business  of  the  United  States  or  of  the  world  at  large  is  too 
vast  to  be  readily  comprehended  by  any  single  person.  The  technical 
part  of  copper  mining  or  of  oil  production  is  in  itself  a  sufficient  study 

10 


VALUE  OF  MINING  PROPERTY 


11 


for  any  man  who  wishes  to  devote  himself  to  it;  but  from  the  standpoint 
of  the  investing  public  not  directly  concerned  with  the  management  of 
properties  there  is  no  necessity  for  dwelling  in  much  detail  on  the  separate 
sections  of  the  mining  business.  Ultimately  there  is  no  essential  distinc- 
tion between  mining  brick  clay  and  mining  diamonds.  They  are  equally 
natural  products;  they  must  be  looked  for  and  handled  on  pretty  much 
the  same  principles.  It  is  probably  a  fact  that  brick  clay  is  just  as  profit- 
able and  just  as  valuable  as  the  rock  which  contains  the  almost  infinites- 
imal proportion  of  diamonds  which  give  it  value. 


Products 

1898 

Quantity 

Value 

Metallic 
Iron,  pig,  long  tons  
Silver,  troy  ounces  
Gold,  troy  ounces  
Copper,  sales  value,  pounds  
Lsad  (refined),  sales  value,  short  tons  

11,773,934 
54,438,000 
3,118,398 
526,512,987 
222,000 
115,399 
31,092 
5,200,000 
3,238 
11,145 

$116,557,000 
32,118,400 
65,463,000 
61,865,276 
16,650,000 
10,385,910 
1,188,627 
1,716,000 
532,101 
3,956 

Zinc,  sales  value,  short  tons  

Quicksilver  (value  at  San  Francisco)  flasks  (75  Ib.  net)  .  . 
Aluminum,  pounds  
Antimony,  short  tons  
Nickel,  value  at  New  York,  pounds  
Tungsten  ore  (60  per  cent,  concentrates)  short  tons.  .  .  . 
Platinum  and  allied  metals,  troy  ounces  
Miscellaneous  ..... 

225 

1,913 

Total  value  of  metallic  products  
p     ,  .               Non-metallic  (spot  values) 
Bituminous  coal  (o),  short  tons 

166,593,623 
47,663,076 

305,482,183 

132,608,713 
75,414,537 
15,296,813 
44,193,359 

Pennsylvania  anthracite,  long  tons  
Natural  gas  and  natural-gas  gasoline  
Petroleum,  barrels  

Total  fuels  
Structural  materials  
Abrasive  materials  
Chemical  materials  
Pigments  .  . 

55,364,233 

267,513,422 
123,592,445 
1,098,784 
12,387,719 
2,962,055 
10,236,246 

Miscellaneous  

Total  value  of  non-metallic  mineral  products  
Total  value  of  metallic  products  

417,790,671 
305,482,183 
1,000,000 

Estimated  value  of  mineral  products  unspecified  
Grand  total  ...    . 

$724,272,854 

(a)  Includes  a  small  amount  of  peat  in  1908  and  1918. 


12 


THE  COST  OF  MINING 


It  may  be  a  matter  of  surprise  to  many  business  men  to  learn  that  in 
1918  the  total  mineral  production  of  the  United  States  in  a  crude  form  at 
the  mines  or  metallurgical  works  was  $5,526,162,000;  that  the  total  num- 
ber of  men  employed  in  this  business  must  be  approximately  2,500,000; 
that  of  this  total  output  the  value  of  gold  and  of  silver  are  each  less  than 
\Y±  per  cent.;  copper  less  than  9  per  cent.;  while  pig  iron  accounts  for  21 
per  cent.;  coal,  33  per  cent.;  natural  gas  and  petroleum  over  5  per  cent, 
lead,  zinc,  and  ferro-alloys  are  each  considerably  in  excess  over  gold ;  and 
structural  materials  such  as  clay,  cement,  lime,  and  stone  equal  the  value 
of  copper.  The  contemplation  of  these  figures  will  be  a  great  help  to 
one's  sense  of  proportion  in  the  mining  business.  I  accordingly  present 
the  following  tables  of  mineral  production  from  the  reports  of  the  U.  S. 
Geological  Survey: 


1 

908 

19 

18 

Quantity 

Value 

Quantity 

Value 

15,936,018 
52,440,800 
4,574,340 
.  942,570,721 
325,595 
190,749 
19,752 
11,152,000 
2,246 

$254,321,000 
28,050,600 
94,560,000 
124,419,335 
27,444,715 
17,930,406 
872,446 
2,434,600 
359,360 

38,981,308 
67,879,206 
3,313,373 
1,908,533,595 
558,256 
492,405 
32,883 

5,183 
882,000 

$1,296,193,508 
67,879,206 
68,493,500 
471,408,000 
79,561,350 
89,618,000 
3,863,752 
41,159,000 
1,306,116 
401,000 

671 
750 

229,955 
14,240 
467,081 

5,041 

38,831(6) 

6,802,000 
4,023,757 
22,359,989 

550,744,388 

2,153,139,000 

332,573,944 
74,347,102 

374,268,268 
158,178,849 
54,640,374 

585,990,261 

88,237,575 

1,466,047,243 
336,480,347 
230,840,000 

179,572,479 

129,706,258 

350,131,000 

690,190,000 

716,793,749 

2,723,557,690 

261,757,143 

442  839  601 

1,074,039 

2,734,692 

31,925,866 

110,065,326 

7,603,269 

28  044  337 

25,646,516 

59,081,022 

1,044,800,582 
550,744,388 

3,366,322,668 
2,253,139,000 

250,000 

6  700  000 

$1,595,794,970 

$5,526,161,668 

(6)  Figures  for  1917;  1918  not  available. 


VALUE  OF  MINING  PROPERTY 
PRICES  OF  SILVER,  COPPER,  LEAD,  AND  ZINC,  1850-1918 


13 


Year 

Silver," 
fine  oz. 

Copper,6 
pound 

Lead,-' 
pound 

Zinc,'' 
pound 

Year 

Silver,' 
fine  oz. 

Copper,6 
pound 

Lead,' 
pound 

Zinc,<* 
pound 

1850 

$1.32 

$0.22 

$0.05 

1885 

$1.07 

$0.108 

$0.040 

$0.043 

1851 

1.34 

0.166 

0.05 

1886 

0.98 

0.111 

0.046 

0.044 

1852 

1.33 

0.22 

0.05 

!  1887 

0.99 

0.138 

0.045 

0.046 

1853 

1.35 

0.22 

0.06 

$0.055 

1888 

0.94 

0.168 

0.044 

0.049 

1854 

1.35 

0.22 

0.06 

1889 

0.94 

0.135 

0.039 

0.05 

1855 

1.34 

0.27 

0.07 

1890 

1.05 

0.156 

0.045 

0.055 

1856 

1.34 

0.27 

0.066 

1891 

0.99 

0.128 

0.043 

0.05 

1857 

1.35 

0.25 

0.06 

1892 

0.87 

0.116 

0.041 

0.046 

1858 

1.34 

0.23 

0.06 

1893 

0.78 

0.108 

0.037 

0.04 

1859 

1.36 

0.22 

0.055 

1894 

0.63 

0.095 

0.033 

0.035 

1860 

1.35 

0.23 

0.056 

1895 

0.65 

0.107 

0.032 

0.036 

1861 

1.33 

0.22 

0.05 

1896 

0.68 

0.108 

0.03 

0.039 

1862 

1.35 

0.22 

0.06 

1897 

0.60 

0.12 

0.036 

0.041 

1863 

1.345 

0.34 

0.06 



1898 

0.59 

0.124 

0.038 

0.046 

1864 

1.345 

0.47 

0.07 

0.139 

1899 

0.60 

0.171 

0.045 

0.058 

1865 

1.337 

0.392 

0.066 

1900 

0.62 

0.166 

0.044 

0.044 

1866 

1.339 

0.342 

0.07 

1901 

0.60 

0.167 

0.043 

0.041 

1867 

1.33 

0.254 

0.065 

1902 

0.53 

0.122 

0.041 

0.048 

1868 

.326 

0.23 

0.065 



1903 

0.54 

0.137 

0.442 

0.054 

1869 

.325 

0.242 

0.06 



1904 

0.58 

0.128 

0.043 

0.051 

1870 

.328 

0.212 

0.06 

1905 

0.61 

0.156 

0.047 

0.059 

1871 

.325 

0.241 

0.06 



1906 

0.68 

0.193 

0.057 

0.061 

1872 

.322 

0.356 

0.064 

1907 

0.66 

0.20 

0.053 

0.059 

1873 

.297 

0.280 

0.06 



1908 

0.53 

0.132 

0.042 

0.047 

1874 

.278 

0.220 

0.06 

1909 

0.52 

0.13 

0.043 

0.054 

1875 

.24 

0.227 

0.058 

0.07 

1910 

0.54 

0.127 

0.044 

0.054 

1876 

.16 

0.21 

0.061 

0.072 

1911 

0.53 

0.125 

0.045 

0.057 

1877 

.20 

0.19 

0.550 

0.06 

1912 

0.615 

0.165 

0.045 

0.069 

1878 

.15 

0.166 

0.036 

0.049 

1913 

0.604 

0.155 

0.044 

0.056 

1879 

.12 

0.186 

0.041 

0.052 

1914 

0.553 

0.133 

0.039 

0.051 

1880 

.15 

0.214 

0.05 

0.065 

1915 

0.507 

0.175 

0.047 

0.124 

1881 

.13 

0.182 

0.048 

0.052 

1916 

0.659 

0.246 

0.069 

0.134 

1882 

.14 

0.191 

0.049 

0.053 

1917 

0.824 

0.273 

0.086 

0.102 

1883 

.11 

0.165 

0.043 

0.045 

1918 

1.00 

0.247 

0.071 

0.091 

1884 

.11 

0.13 

0.037 

0.044 

a  Report  of  Director  of  the  Mint,  pp.  212-213,  1914.  Equivalent  of  fine  ounce 
based  on  average  price  and  average  rate  of  exchange.  For  1916  and  1917  dealers' 
buying  price,  New  York.  For  1918  average  price  supplied  by  Bureau  of  the  Mint. 

b  Weed,  W.  H.,  Copper  handbook,  vol.  11,  pp.  1339,  1343,  for  years  1850-1903. 
By  computation  from  data  for  years  1850-1860,  p.  1339.  Survey  computations  for 
electrolytic  copper  since  1904.  For  1916,  1917,  and  1918,  sales  price  all  marketable 
grades. 

c  New  York  price,  Ingalls,  W.  R.,  Lead  and  zinc  in  the  United  States,  p.  203,  1908. 
U.  S.  Geological  Survey  since  1904.  For  1916,  outside  spot  quotations,  New  York. 
For  1917  and  1918  average  sales  price,  all  grades. 

d  New  York  price,  1875-1904,  Ingalls,  W.  R.,  Lead  and  zinc  in  the  United  States, 
p.  342,  1908.  St.  Louis  price,  U.  S.  Geological  Survey,  since  1904.  The'zinc*price 
for  1915,  1916,  1917  and  1918  is  average  sales  price  of  zinc,  all  grades.  Oral  commu- 
nication from  C.  E.  Siebenthal  for  1853  and  1864. 


14 


THE  COST  OF  MINING 


TOTAL  VALUE  OF  MINEKAL  PRODUCTS  OF  THE  UNITED  STATES  FROM  1880  TO  1918. 


Unspecified 

Year 

Metallic 

Nonmetallic 

(metallic  and 

Total 

nonmetalic) 

1880 

$187,880,880 

$173,581,917 

$6,000,000 

$367,462,797 

1881 

189,413,459 

207,207,019 

6,500,000 

403,120,478 

1882 

215,820,070 

230,785,547 

6,500,000 

453,105,617 

1883 

197,881,610 

243,679,889 

6,500,000 

448,061,499 

1884 

180,284,208 

221,755,346 

5,000,000 

407,039,554 

1885 

172,218,218 

242,332,845 

5,000,000 

419,551,063 

1886 

204,399,872 

250,985,090 

800,000 

456,184,962 

1887 

240,791,068 

294,041,980 

800,000 

535,633,048 

1888 

242,010,000 

310,888,983 

900,000 

553,798,983 

1889 

250,324,369 

291,001,413 

1,000,000 

542,325,782 

1890 

303,440,430 

310,988,907 

1,000,000 

615,429,337 

1891 

280,484,844 

319,363,338 

1,000,000 

600,848,182 

1892 

283,715,295 

337,516,444 

1,000,000 

622,231,739 

1893 

223,153,770 

321,339,395 

1,000,000 

545,493,165 

1894 

186,835,353 

362,409,394 

1,000,000 

550,244,747 

1895 

248,033,039 

393,658,083 

1,000,000 

642,691,122 

1896 

252,075,130 

387,965,870 

1,000,000 

641,041,000 

1897 

269,934,178 

380,677,600 

1,000,000 

651,611,778 

1898 

308,247,446 

417,794,018 

1,000,000 

727,041,464 

1899 

483,520,531 

525,571,880 

1,000,000 

1,010,092,411 

1900 

513,731,959 

594,194,796 

1,000,000 

1,108,926,755 

1901 

493,313,578 

660,764,256 

1,000,000 

1,155,077,834 

1902 

604,517,044 

722,433,728 

1,000,000 

1,327,950,772 

1903 

588,753,010 

905,628,365 

1,000,000 

1,495,381,375 

1904 

501,114,224 

859,074,529 

400,000 

1,360,588,753 

1905 

702,584,608 

921,181,524 

400,000 

1,624,166,132 

1906 

886,179,981 

1,016,390,015 

200,000 

1,902,769,996 

1907 

904,093,201 

1,165,748,197 

100,000 

2,069,941,398 

1908 

550,744,388 

1,043,702,454 

250,000 

1,594,696,842 

1909 

754,940,809 

1,131,515,921 

300,000 

1,886,756,730 

1910 

749,876,234 

1,241,039,986 

300,000 

1,991,216,220 

1911 

680,888,929 

1,245,676,783 

250,000 

1,926,815,712 

1912 

866,381,073 

1,378,310,236 

500,000 

2,245,191,309 

1913 

883,222,012 

1,557,976,159 

420,000 

2,441,618,171 

1914 

691,081,734 

1,426,754,508 

470,000 

2,118,306,242 

1915 

991,729,648 

1,398,565,121 

7,450,000 

2,397,744,769 

1916 

1,620,508,000 

1,878,464,000 

15,000,000 

3,513,972,000 

1917 

2,086,233,000 

2,915,326,000 

5,700,000 

5,007,259,000 

1918 

2,153,139,000 

3,366,323,000 

6,700,000 

5,526,162,000 

Grand  total.  . 

22,143,496,000 

31,652,615,000 

91,440,000 

53,887,551,000 

VALUE  OF  MINING  PROPERTY  15 

It  is  to  be  understood,  of  course,  that  market  values  are  not  received 
by  producers  for  metals  in  ore  and  intermediate  products,  nor  always 
for  metals  in  marketable  form;  that  payment  is  made  in  accordance  with 
contracts  for  treatment  or  sale;  and  that,  therefore,  average  daily  quota- 
tions do  not  necessarily  agree  with  average  prices  received. 

I  have  not  been  able  to  cover  the  whole  field  of  the  mining  business, 
but  I  shall  endeavor  to  present  some  idea  of  the  business  as  applied  to 
coal,  iron,  gold,  copper,  silver,  lead,  and  zinc.  These  materials  amount 
to  over  75  per  cent,  of  the  total  mineral  output  and  it  is  fair  to  believe 
that  the  principles  governing  the  exploitation  of  this  much  will  apply 
also  to  the  remainder. 

The  above  tables  should  not  be  dsmissed  without  some  further  com- 
ment. They  emphasize  not  only  the  importance  of  the  mining  business, 
but  also  its  increasing  importance.  The  mineral  output  per  capita 
in  the  United  States  in  1880,  which  was  a  boom  year,  was  less  than 
$7.50,  while  in  1918  it  had  risen  to  $50.  There  is  not  the  slightest 
indication  that  the  increase  in  the  use  of  minerals  has  anywhere  nearly 
reached  its  limits.  On  the  contrary,  the  development  is  in  full  career 
and  is  likely  to  continue  for  many  decades.  So  long  as  the  United 
States  has  two  thousand  billion  tons  of  accessible  coal  within  its  borders 
and  vast  tracts  of  irrigable  and  swamp  lands  still  undeveloped  and  a 
rapidly  increasing  population  daily  becoming  more  accustomed  to  increas- 
ing standards  of  efficiency  and  an  increasing  scale  of  comfort,  we  may  look 
forward  to  great  increases  of  business.  There  is  no  other  field  in  which 
activity  promises  to  be  more  widely  extended  than  in  mining  which  fur- 
nishes the  basis  for  most  of  the  characteristic  manufactures  of  modern 
civilization. 

Valuation  of  Established  Mining  Concerns. — It  is  in  this  particular 
field  also  that  the  process  of  consolidation  of  unit  enterprises  into  larger, 
more  stable,  and  more  effective  groups  is  most  noticeable.  It  is  in- 
evitable that  this  process  will  mean  an  extension  of  ownership  among  a 
larger  number  of  holders,  concurrent  with  the  concentration  of  man- 
agement in  proportionately  fewer  but  more  effective  hands.  The  great 
enterprises  of  the  present  are  usually  far  beyond  the  resources  of  any 
individul  capitalist.  Shares  of  most  of  our  great  corporations  are  divided 
among  many  thousand  people.  The  expansion  of  this  kind  of  ownership 
is  as  inevitable  as  the  expansion  of  business  itself.  I  regard  it,  therefore, 
as  an  important  function  of  the  mining  engineer  and  mining  investor  of  the 
immediate  future  to  study  and  fix  the  valuation  of  industrial  shares, 
based  partly  or  wholly  on  mining  enterprises,  as  well  as  of  single  min- 
ing properties.  My  purpose  is  to  explain  hqw  the  valuation  of 
mining  properties  depends  on  some  cardinal  principles  that  are  easily 
understood  in  general  terms,  but  may  easily  be  obscured  in  concrete 
cases.  These  principles  of  course  apply  not  to  speculation  but  to  serious 


16  THE  COST  OF  MINING 

investment.  The  basic  factors  are :  first,  average  market  prices ;  secondly, 
average  costs;  thirdly,  the  life  of  the  mine.  While  each  of  these  factors 
is  so  easily  understood  as  to  be  practically  axiomatic  their  application 
always  involves  questions  that  are  not  always  easy  to  answer. 

Average  Prices. — The  average  price  of  any  article  for  a  period  of  years 
in  the  past  is  usually  very  easy  to  determine,  but  we  are  immediately 
confronted  with  the  fact  that  prices  determined  with  accuracy  for  certain 
periods  of  years  do  not  agree  with  equally  well  determined  prices  of 
other  periods  of  years.  For  example,  the  price  of  copper  for  the  last 
sixty  years  has  averaged  16.33  cents  per  pound.  For  the  last  twenty 
years  it  has  averaged  16.89  cents  per  pound  while  for  the  last  ten  years 
it  has  averaged  17.96  cents  per  pound.  Now  since  the  question  is  not 
what  prices  have  been  in  the  past,  but  what  they  are  likely  to  be  in 
the  future,  it  is  evident  that  we  must  select  from  these  various  averages 
the  one  that  seems  most  likely  to  conform  with  the  probable  conditions 
ahead  of  us.  Such  a  selection  involves  the  consideration  of  a  great 
variety  of  subjects.  A  thing  that  throws  most  light  on  this  problem  is  the 
course  of  prices  themselves.  If  these  prices  are  plotted  in  a  curve  for  a 
long  period  of  years  it  will  be  found  that  there  have  been  a  series  of  high- 
price  periods  followed  by  another  series  of  low-price  periods.  It  may 
and  will  make  a  good  deal  of  difference  with  our  prediction  of  the  future 
whether  the  crest  of  each  high  wave  is  higher  than  that  of  the  one  pre- 
ceding it,  and  the  low  wave  not  quite  so  low  as  the  one  that  preceded  it. 
If  we  find  such  a  state  of  affairs,  we  are  probably  justified  in  concluding 
that  the  average  price  of  such  a  commodity  is  rising. 

One  will  be  influenced  in  like  manner  by  the  demand  for  a  given 
article  in  comparison  with  other  articles.  If  we  should  find,  for  instance, 
that  the  amount  of  lead  used  in  1890  was  equal  to  the  amount  of  copper 
used,  while  in  1900  only  one-half  as  much  was  used,  and  in  1910  only 
one-quarter  as  much,  it  would  seem  to  be  well  worth  while  to  look  into 
the  reasons  for  such  changes.  These  reasons  might  be  complex  and 
obscure.  It  might  be  that  they  would  argue  either  for  higher  or  for  lower 
prices  for  either  of  the  articles  in  question.  If  the  consumption  of  lead 
were  proportionately  diminished,  it  might  be  explained  by  a  deficient 
supply  which  would  argue  for  higher  prices,  or  it  might  be  due  to  a 
substitution  of  other  materials  for  the  uses  to  which  lead  had  been  put; 
which  would  argue  for  lower  prices.  It  is  well  to  point  out  that  these 
are  precisely  questions  that  people  engaged  in  trade  are  constantly  con- 
sidering. But  for  the  man  who  is  looking  for  general  tendencies  and  not 
for  the  conditions  of  the  moment  the  ideas  of  such  people  are  too  much 
fixed  on  near  considerations.  Their  eyes  are  apt  to  focus  not  on  the 
developments  of  a  decade,  but  on  those  of  a  week  or  month.  It  is  against 
the  judging  of  great  and  stable  securities  on  these  momentary  considera- 
tions that  it  is  most  necessary  to  protest. 


VALUE  OF  MINING  PROPERTY  17 

Average  Costs. — The  determination  of  average  costs  is  the  principal 
matter  discussed  in  this  volume.  It  is  necessary  to  introduce  here  a 
consideration  that  is  easily  overlooked,  namely,  that  if  prices  vary,  costs 
vary  also,  but  not  to  the  same  extent.  The  value  of  securities  is  too 
often  affected  by  a  hasty  conclusion  on  the  part  of  the  public  that  a  rise 
in  prices  will  go  wholly  to  profits,  or  that  a  drop  in  prices  will  be  taken 
wholly  out  of  profits.  As  an  illustration  of  this  fallacy  I  reproduce  here 
an  article  published  in  the  beginning  of  1908  in  the  Engineering  and 
Mining  Journal  on  the  Vanishing  Point  of  Profits: 

Concurrent  Fluctuation  of  Costs  and  Prices. — "The  Federal  Mining  and 
Smelting  Company's  report  for  1907  shows  a  net  profit  of  $2,232,249  after  taking 
out  a  'development  account'  of  $300,000.  This  came  from  130,373  tons  of  con-- 
centrates  containing  3,689,298  oz.  of  silver  (worth  68  cents  per  ounce,  or  $2,508- 
722.64)  and  59,746  tons  of  lead  (worth  $116  per  ton,  or  $6,930,536),  the  total  gross 
value  being  $9,439,258.64).  On  this  output  the  profits  amount  to  23.6  per  cent, 
and  the  costs  must  therefore  be  76.4  per  cent.,  giving  an  apparent  cost  for  lead 
of  4.43  cents  per  pound  and  for  silver  of  51.95  per  ounce. 

"At  first  thought  one  is  apt  to  assume  that  with  costs  the  same  the  company 
would  receive  no  profit  unless  the  prices  were  above  4.43  cents  for  lead  and 
51.95  cents  for  silver.  How  false  such  an  assumption  would  be  appears  from 
the  following: 

"The  Cceur  d'Alene  mining  companies,  of  which  this  is  one,  do  not  smelt 
their  own  concentrates  but  sell  them  to  smelting  companies  under  contracts 
somewhat  as  follows:  The  smelter  pays  for  90  per  cent,  of  the  lead  at  90  per  cent, 
of  the  New  York  price,  or  81  per  cent,  of  the  full  quantity  and  price  when  lead 
sells  at  4.10  cents  per  pound  or  under.  When  the  price  rises  above  4.10  cents  per 
pound  the  smelter  pays  81  per  cent,  and  one-half  the  additional  price.  Thus  if 
lead  sells  at  4.50  per  pound  the  smelter  pays  81  per  cent,  of  4.10  plus  one-half 
of  0.40  =  3.521.  The  smelter  pays  for  95  per  cent,  of  the  full  value  of  the  silver. 
A  freight  and  treatment  charge  of  $16  a  ton  is  deducted  from  the  value  of  aver- 
age concentrates.  Applying  this  rule  to  the  output  for  1907  we  find  that  the 
cost  of  producing  concentrates  was  $23.39  a  ton,  thus: 

Selling  price  Contract  price 

Lead 5.80 4.171 

Silver 68.00 64.60 

916.54  Ib.  lead  at  4.171  cents $38.23 

28 . 298  oz.  silver  at  64.60  cents . .  18 . 28 


Total  value  per  ton 56 . 51 

Freight  and  treatment  charge 16 . 00 


$40.51 

130,373  tons  at  $40.51 $5,281,410.23 

Profits 2,232,249.00 


Total  cost  of  production 3,049,161 .23 

$3,049,161.23 

=  $23.39  cost  per  ton  produced 

130,373 


18  THE  COST  OF  MINING 

"Now  let  us  see  what  would  happen  To  the  Federal  Mining  and  Smelting 
Company  were  the  prices  reduced  to  the  point  where  profits  apparently  vanish 
according  to  1907  experience.  The  concentrates  contained:  lead,  45.827  per 
cent.,  916.54  lb.,  and  silver,  28.298  oz.  per  ton.  The  value  is  figured  as  follows: 

Selling  price  Contract  price 

Lead 4.41 3.426 

Silver 51.95 49.353 

916.54  lb.  lead  at  3.426  cents $31 .40 

28.298  oz.  silver  at  49.353  cents 13.  97 

Total  value $45.37 

On  this  our  costs  are : 

Freight  and  treatment  charge $16. 00 

Mining  and  milling 23 . 39 


$39.39 

"  We  have  a  profit  remaining  of  $5.98  per  ton.  This  on  130,373  tons  would  be 
$779,630.54  or  34.9  per  cent,  of  the  profit  at  1907  prices.  On  this  basis  we  may 
figure  the  real  vanishing  point  for  lead  as  follows: 

"Let  the  silver  price  remain  stationary  and  we  shall  have  in  our  concentrates 
silver  worth  $13.97.  Our  cost  is  $39.39;  therefore,  916.54  lb.  of  lead  must  be 
worth  $25.42  or  2.773  cents  per  pound.  But  as  this  is  only  81  per  cent,  of  the 
selling  price  the  latter  will  figure  3.421  cents.  It  would  seem,  therefore,  that  we 
have  reached  the  vanishing  point  of  profits  as  far  as  the  Federal  Mining  and 
Smelting  Company  is  concerned  with  lead  at  3.421  cents  and  silver  at  51.95 
cents  at  New  York. 

"But  this  deduction  may  also  be  wrong,  for  the  company  has  a  chance  to 
select  its  ores  and  produce  a  higher  grade  product.  Suppose  it  produces  from  its 
more  favorble  mines  only  65,000  tons  of  concentrates  instead  of  130,373  tons, 
and  that  the  selected  concentrates  carry  56  per  cent,  lead  and  38  oz.  silver.  Sup- 
pose this  ore  cost  10  per  cent,  more  for  mining  and  milling  and  12.5  per  cent, 
more  for  freight  and  treatment  and  we  have  a  cost  of 

Mining  and  milling $25 .  75 

Freight  and  treatment 18 . 00 


43 . 75 
'But  the  ore  will  be  worth  as  follows: 

Lead,  1120  pounds  at  2.773  cents $31.06 

Silver,  38  ounces  at  49.353  cents ...  18 .  75 


$49.81 

"Thus  we  still  have  a  profit  of  $6.08  per  ton  or  $395,200,  and  in  addition  the 
company  is  keeping  in  its  mines  a  very  large  amount  of  ore  that  may  be  available 
at  better  prices.  With  the  above  grade  of  concentrates,  supposing  that  silver 
remains  the  same,  the  vanishing  point  of  profit  on  lead  will  be  reached  at  2.230 
cents  by  contract  or  2.753  cents  at  New  York. 

"Even  yet  we  have  not  reached  the  limit  of  the  company's  resources.     It  is 


VALUE  OF  MINING  PROPERTY  19 

safe  to  say  that  if  lead  had  to  be  sold  a^8  cents  per  pound,  supplies  to  the  mines 
would  be  cheaper  and  wages  could  be  reduced." 

General  Principles  of  Relation  of  Cost  to  Price. — A  simpler  explana- 
tion of  the  point  explained  here  may  be  taken  from  the  following  con- 
siderations: A  normal  price  for  copper  may  be  assumed  to  be  15  cents  a 
pound.  Let  us  suppose  that  a  company  under  ordinary  conditions  can 
produce  copper  for  10  cents  a  pound,  making,  therefore,  a  normal  profit 
of  5  cents.  Let  us  suppose  that  copper  goes  up  to  20  cents  a  pound  and 
analyze  roughly  the  conditions  which  would  take  place  under  such  a 
rise  of  price  and  the  effect  of  those  conditions  on  the  cost  of  production. 

Such  a  considerable  rise  of  price  could  only  be  due  to  a  deficiency  in 
the  supply.  Apart  from  the  cutting  off  of  important  sources  of  supply 
by  war  or  other  calamity,  generally  this  deficiency  must  be  caused 
either  by  a  shortage  of  ore  or  by  a_shortage  of  labor  or  by  both.  In  the 
case  of  an  individual  mine  a  shortage  in  the  supply  of  ore  would  naturally 
mean  either  impending  exhaustion  or  an  insufficient  amount  of  develop- 
ment. In  an  ordinary  mine  the  volume  of  copper  could  be  increased  by 
utilizing  some  low-grade  ores  which  would  not  ordinarily  be  worth 
working.  Under  the  stimulation  of  a  higher  price  the  management 
would  naturally  utilize  these  low-grade  ores  which  it  could  not  work  at 
10  cents  or  even  at  15  cents  copper.  It  follows  as  a  natural  and  almost 
inevitable  result  that  each  mine  would,  at  20  cents  copper,  undertake 
the  working  of  a  proportion  of  lower  grade  stuff  at  very  much  increased 
cost. 

But  the  mere  undertaking  of  increased  production  implies  an  increased 
use  of  labor.  Both  the  efficiency  and  the  supply  of  labor  are  variables. 
The  efficiency  generally  depends  on  the  supply.  Where  an  enterprise 
is  well  established  and  wages  are  high  the  number  of  miners  is  apt  to 
exceed  by  a  certain  percentage  the  demand.  In  other  words,  ther  is 
always  a  number  of  men  looking  for  a  job.  The  existence  of  a  crowd  of 
unemployed  men  always  acts  as  a  spur  to  the  exertion  of  those  who  are 
fortunate  enough  to  have  jobs.  The  sudden  expansion  of  the  business 
will  take  away  the  surplus  of  labor.  The  men  who  come  out  of  the 
shafts  at  night  no  longer  see  their  employment  threatened  by  competition. 
They  accordingly  take  things  easier  and  the  immediate  result  is  a  lowering 
of  efficiency.  This  means  an  increase  in  cost.  Sometimes  it  means  a 
very  great  increase  of  cost. 

If  the  enterprise  is  not  paying  a  rate  of  wages  sufficient  to  cause  an 
over-supply  of  labor  under  normal  conditions,  then  any  attempt  to 
increase  the  scale  of  operations  will  be  immediately  thwarted  by  lack  of 
men  to  do  the  work.  If  the  company  finds  it  necessary  under  such 
conditions  to  increase  its  operations  it  must  first  secure  an  increased 
supply  of  labor.  The  usual  way  out  of  such  a  difficulty  is  to  raise  the 
wages. 


20  THE  COST  OF  MINING 

Furthermore,  if  copper  is  scarce  and  in  great  demand  it  is  usually  a 
corollary  that  other  products  are  scarce  and  in  great  demand.  Very 
likely  the  railroads  will  be  congested  with  freight;  manufacturers  of 
machinery  overcrowded  with  orders.  These  are  all  factors  that  increase 
cost.  A  mining  company  wishing  to  get  out  a  large  output  of  20-cent 
copper,  when  it  usually  gets  only  15  cents,  finds  itself  under  a  drain  of 
heavy  expense,  bidding  up  prices  of  labor  and  supplies  of  all  kinds  in 
order  to  accomplish  its  purpose.  In  extreme  cases  it  is  quite  probable 
that  the  cost  is  so  much  increased  by  these  factors  as  to  absorb  the  whole 
advantage  of  the  increased  price.  That  a  certain  proportion  will  be 
absorbed  may  be  considered  inevitable. 

The  phenomenon  of  such  increases  of  cost  through  such  conditions 
of  trade  as  have  been  described  is  familiar  to  any  businessman  who  has 
lived  through  one  or  two  panics.  When  you  see  in  the  newspapers  or  in 
reports  of  industrial  concerns  complaints  of  a  shortage  of  labor  and  the 
inefficiency  of  labor  you  may  prepare  for  a  panic. 

It  is  a  corollary  from  the  same  considerations  that  in  periods  of 
depression  costs  will  be  reduced.  Let  us  suppose  that  our  copper  com- 
pany which  has  been  used  to  15-cent  copper  finds  itself  unable  to  sell  for 
more  than  11  cents.  This  must  mean  that  the  demand  for  copper  has 
diminished.  It  is  no  longer  necessary  to  produce  so  much.  There  is  no 
longer  the  necessity  for  active  development.  Copper  that  is  needed  can 
be  produced  from  selected  ores.  Since  fewer  men  will  be  needed^the 
work  will  be  done  by  selected  men  who  will  work  under  a  greatly  increased 
stimulus  of  competition.  Wages  may  be  reduced.  The  cumulative 
effects  of  such  conditions  may  mean  that  the  company  which  has  pro- 
duced copper  normally  at  10  cents  may  produce  it  for  a  period  at  8  cents 
^  or  even  less  and  of  course  find  a  considerable  margin  of  profit. 
M  c  The  Normal  Profit  of  Mines. — The  recent  war  brought  about  such  a 
disturbance  of  the  commercial  conditions  which  we  were  accustomed  to 
consider  as  normal  that  doubts  have  arisen  and  still  exist  as  to  how  soon, 
if  ever,  there  will  be  a  return  to  the  former  basis.  That  basis  was  not, 
of  course,  uniform  or  stable  but  represented  the  average  of  demand, 
production  and  prices  which  ebbed  and  flowed  under  the  impulse  of  such 
industrial  excitements  and  reactions  as  have  just  been  enumerated  like 
irregular  and  unpredictable,  but  recurrent,  tides.  There  has  always 
been  the  same  difficulty  in  perceiving  the  average  price  of  a  metal  as 
there  is  in  perceiving  the  exact  level  of  the  sea:  observers  concern  them- 
selves not  so  much  with  the  level  of  any  particular  moment  as  with  a 
record  of  the  fluctuations  from  which  they  estimate  an  average  as  a 
mathematical  conception.  But  a  World  War  carries  with  it  the  possi- 
bility of  being  a  human  earthquake  which  may  change  the  basis  of  com- 
mercial calculations  just  as  a  natural  earthquake,  which  of  course,  is 
merely  the  expression  of  internal  stresses  in  the  earth's  crust,  may  make 


VALUE  OF  MINING  PROPERTY  21 

a  change  in  the  level  of  the  sea.  We  have  had  with  this  human  earth- 
quake a  tidal  wave  of  high  prices  for  labor  and  commodities.  Is  it 
merely  a  tidal  wave  which  will  flow  back  in  its  entirety,  carrying  the  price 
level  temporarily  by  sheer  momentum  down  below  normal?  or  is  it  a 
permanent  advance? 

We  know  that  prices  will  fall  below  the  war  peaks,  for  in  most  com- 
modities they  have  already  done  so;  but  a  recession  does  not  necessarily 
mean  a  return  to  the  former  average.  The  prices  are  never  stationary; 
they  are  always  rising  or  falling.  The  question  is  whether  in  the  post- 
war period  they  are  likely  to  rise  and  fall  above  and  below  a  different 
level  than  before.  There  are  apparently  good  reasons  for  expecting  that 
the  general  level  will  be  higher,  at  least  for  a  considerable  period. 

1.  Prices  of  commodities  have  some  relation  to  the  rate  of  wages. 
It  is  true  that  in  all  industrial  countries  there  has  been  a  steady  increase 
in  the  output  per  man  which  justifies  the  raising  of  wages;  but  the  effect 
of  a  war  is  to  raise  the  wages  without  increasing  the  productivity,  in 
fact  actually  decreasing  it.     There  is  a  passive  resistance  on  the  part 
of  employees  to  a  reduction  of  wages  and  to  a  certain  extent  this  resistance 
may  not  be  overcome  in  the  process  of  readjustment :  they  may  succeed 
in  getting  more  dollars  but  have  the  same  amount  of  commodities  as 
before,  that  is,  wages  will  only  seem  to  be  higher  and  commodities  will 
sell  at  higher  prices. 

2.  The  enormous  national  debts  may  have  a  considerable  effect  in 
holding  up  prices.     Taxes  are  bound  to  remain  greatly  increased  and 
wherever  possible  people  will  add  the  amount  of  taxes  to  the  price  of 
commodities.     Indeed  this  is  inevitable;  for  on  the  theory  that  prices 
are  some  function  of  the  cost,  that  is,  when  costs  increase  prices  increase, 
it  is  self-evident  that  increased  taxes  mean  increased  costs  and  higher 
prices. 

But  as  a  practical  matter  the  price  level  is  probably  less  important 
to  the  producers  than  we  are  accustomed  to  imagine.  The  products  of 
mines  are  staples,  indispensable  to  the  life  of  civilization.  There  is  a 
constant  demand  for  them.  Some  mines  can  produce  more  cheaply 
than  others.  The  cheap  producers  are  profitable;  the  higher  cost  pro- 
ducers are  only  profitable  during  temporary  waves  of  sharp  demand 
Following  out  this  line  of  reasoning  it  is  easy  to  see  that  the  average 
profit  of  a  mine  is  a  measure  of  its  advantage  compared  to  other  mines; 
in  other  words  it  is  determined  by  competition  with  other  mines.  It  will 
be  found,  for  instance,  that  a  given  property  is  able  to  pay  one  quarter 
of  its  gross  output  in  dividends.  This  simply  means  that  three  quarters 
of  its  output  is  consumed  in  costs,  of  one  form  or  another,  and  that  the 
remaining  quarter  goes  to  the  stockholders.  This  proportion  varies 
from  year  to  year,  but  in  the  long  run  an  average  is  established  and 
maintained.  It  seems  logical  to  believe  that  this  proportion  will  remain 


22  THE  COST  OF  MINING 

as  fixed  as  ever,  whatever  the  level  of  prices.  Thus  we  may  believe  that  a 
copper  mine  which  will  pay  3  cents  a  pound  if  the  selling  price  of  the  metal 
averages  12  cents  will  be  able  to  pay  6  cents  a  pound  if  the  metal  is  to 
average  24  cents.  I  am  disposed  to  accept  this  proposition  as  a  sort  of 
general  principle.  Perhaps  it  is  an  important  thing  to  bear  in  mind 
during  the  uncertainties  attending  the  readjustment  and  reconstruction 
that  must  follow  the  war.  There  is,  of  course,  some  danger  in  confusing 
the  changes  in  the  condition  of  individual  mines  with  the  changes  in 
industrial  conditions. 

If  this  proposition  is  true  it  involves  the  following  consequences:  (1) 
That  changes  in  price  levels  which  affect  all  commodities  alike  are  not 
of  fundamental  importance  to  producers,  for  it  is  nothing  but  a  change  in 
the  value  of  a  dollar.  If  wages  are  doubled,  costs  will  be  doubled,  prices 
will  be  doubled  and  each  producer  will  have  the  same  amount  of  goods 
as  before.  (2)  But  a  rise  of  prices  is  unfavorable  to  all  forms  of  fixed 
income  and  a  lowering  of  prices  is  favorable  to  fixed  income.  Thus  if 
prices  are  to  be  double  those  of  the  pre-war  period  the  general  effect  will 
be  to  repudiate,  or  cancel,  half  the  bonds  and  mortgages  of  the  world, 
including  all  national  debts,  except  of  course  those  that  were  floated 
during  the  period  of  inflation.  The  nominal  value  of  the  older  debts, 
will  remain  the  same  of  course,  the  real  value  will  be  reduced  one  half. 
(3)  In  the  case  of  staples,  including  mines,  mining  dividends  and  mining 
stocks,  the  real  value  will  remain  the  same,  but  the  nominal  value  will 
be  doubled. 

Thus  it  is  reasonable  to  conclude  that  the  question  of  a  higher  or  lower 
level  of  prices  for  the  future  has  a  distinct  bearing  on  allocating  the  cost 
of  the  war,  and  that  the  influences  that  control  it  wear  a  rather  important 
aspect. 

In  view  of  the  uncertainty  which  obtains  just  now  as  to  the  effect  of 
these  influences  (in  reality  merely  an  uncertainty  as  to  the  future  pur- 
chasing power  of  the  dollar)  it  seems  logical  to  give  considerable  attention 
to  the  cost  of  commodities  measured  in  the  commodities  themselves. 
This  it  seems  to  me  is  likely  to  remain  nearly  uniform  so  long  as  the 
natural  factors  remain  constant.  The  output  per  man  from  a  given  de- 
posit will  surely  return  to  the  average  established  by  competition  before 
the  war  and  both  costs  and  prices  will  return  to  about  the  same  relation 
to  the  rate  of  wages.  All  this  brings  us  to  the  conclusion  that  the  results 
obtained  up  to  the  end  of  1915  are  much  more  valuable  as  illustrations  of 
permanent  influences  than  those  of  the  three  following  years,  and  in  the 
discussions  which  are  to  follow  the  records  from  which  important  con- 
clusions are  drawn  usually  end  with  the  year  1915;  those  of  the  following 
years  being  discussed  mainly  to  illustrate  the  nature  and  degree  of  the 
interruption  of  normal  conditions.  The  practical  way  to  draw  valid 
conclusions  as  to  the  value  of  mines  is  therefore  to  figure  out  the  per- 


VALUE  OF  MINING  PROPERTY  23 

centage  of  the  gross  value  that  could  be  paid  in  dividends  under  the 
pre-war  conditions,  and  assume  that  the  same  percentage  could  be  paid 
under  any  level  of  prices  which  may  become  permanent. 

Reduction  of  Costs  Per  Ton  not  a  Sign  of  Prosperity. — Also  we  should 
not  fail  to  note  another  general  tendency  in  every  important  mining 
enterprise,  and  that  is  the  tendency  for  costs  to  become  reduced  as  timeli 
goes  on.  In  part  this  tendency  is  due  to  general  improvements  in  mach- 
inery and  methods,  new  inventions,  better  transportation  facilities,  etc. 
which  the  individual  enterprise  shares  with  the  industry  at  large.  But 
the  larger  part  comes  from  the  settling  down  of  the  enterprise  itself 
to  a  steady  gait,  to  its  better  organization,  to  the  better  results  secured 
from  labor,  and  usually  to  a  larger  scale  of  operation  whereby  the  unit 
cost  of  production  is  reduced  by  increasing  the  number  of  tons  by  which 
the  fixed  items  on  the  cost  sheet  are  divided.  It  is  furthermore  to  be 
noted  that  a  diminished  cost  per  ton  due  to  these  causes  hardly  ever  results 
in  an  increased  profit  per  ton  when  the  price  of  the  product  remains  con- 
stant or  even  when  it  increases.  Many  reasons  bring  about  this  result, 
but  the  most  important  undoubtedly  is  the  equally  general  tendency 
to  a  reduction  with  time  in  the  metallic  content  of  the  ton  of  ore.  This 
in  many  cases  comes  from  an  actual  impoverishment  with  depth,  which 
forces  the  adoption  of  better  methods,  resulting  in  lower  costs  through 
the  inexorable  necessity  of  diminishing  returns.  The  Calumet  &  Hecla 
is  a  conspicuous  example  of  the  achievement  of  lower  costs  under  the 
necessity  imposed  by  a  fall  of  one-half  in  the  yield  of  its  ore.  But  the 
enlarged  scale  of  operation  itself  works  in  the  same  direction  even  more 
effectively.  The  mill  or  reduction  works  is  nearly  always  overbuilt 
for  the  ore  developed.  To  get  a  low  cost  per  ton  is  must  be  operated 
to  its  capacity.  This  puts  a  strain  on  the  mine,  with  the  result  that  in 
order  to  keep  up  the  tonnage  certain  stopes  are  worked  which  yield 
rock  from  which  only  a  small  profit  or  none  at  all  is  realized.  Further- 
more, in  many  mines  with  ores  of  several  grades  the  lowering  of  costs 
automatically,  as  it  were,  enlarges  the  available  tonnage  that  may  be 
handled  with  some  profit,  the  effect  being  precisely  the  same  as  an  in- 
crease in  the  price  of  the  product.  This  result  is  shown  very  clearly 
by  several  of  the  newer  Lake  Superior  copper  mines,  where  an  en- 
largement of  the  mill  and  of  operations  generally  has  resulted  not  only 
in  a  diminished  cost  per  ton,  but  also  in  a  diminished  yield  per  ton. 
It  is  also  conspicuously  shown  by  most  of  the  gold  mines  on  the  Rand. 

These  considerations  may  be  summed  up  in  a  few  words.  A  di- 
minished metal  content  in  the  ton  of  ore  makes  it  necessary  to  reduce 
costs,  and  a  reduced  cost  per  ton,  which  always  comes  with  time  and 
enlarged  operations,  permits  the  handling  at  a  profit  of  lower  and  lower ' 
grade  ore.  Therefore,  quite  independently  of  the  course  of  prices,  we 
have  a  tendency  for  cost  and  metallic  content  per  ton  to  fall  together, 


24  THE  COST  OF  MINING 

and  the  net  result  of  this  tendency  almost  invariably  is  a  diminished 
profit  per  ton. 

From  these  considerations  it  will  appear  that  there  is  no  great  danger 
in  calculating  on  average  costs  bearing  a  certain  proportion  to  average 
prices.  I  feel  like  insisting  that  the  only  rational  way  of  calculating 
mining  profits  is  to  consider  both  with  the  greatest  possible  care. 

In  this  connection  I  wish  to  point  out  that  in  calculating  costs  great 
attention  must  be  given  to  capital  charges  as  well  as  to  operating  charges. 
Undue  attention  to  details  of  cost  and  too  much  attention  to  statements 
covering  single  months  or  years  are  apt  to  befog  one's  vision  as  to  the 
real  proportion  of  capital  expenses.  This  is  an  error  into  which  I  have 
been  particularly  careful  not  to  fall. 

In  the  discussion  of  costs  to  be  presented  in  the  following  chapters 
I  have  given  great  attention  to  the  problem  of  entering  in  capital  or 
construction  costs  in  due  and  fair  proportions.  It  seems  worth  while 
to  state  at  the  outset  that  in  the  metal  mines  of  the  United  States  the 
total  cost  for  the  life  of  a  mine  is  apt  to  exceed  the  operating  charges 
from  20  per  cent,  to  40  per  cent. 

Nature  of  Mining  Investments. — Mining  companies  may  be  divided 
into: 

I.  Those  which  own  a  single  mine  confined  to  a  single  orebody  or  a 
definite  tract. 

II.  Those  that  own  various  mines  each  with  its  individual  capabilities 
for  expansion. 

III.  Those  that  combine  mining  with  other  business  such  as  transpor- 
tation, smelting,  or  manufacturing. 

It  should  be  plain  that  these  variations  afford  a  great  range  of  con- 
siderations from  simple  to  complex,  and  that  there  is  room  for  the  exercise 
of  much  talent  and  experience  in  the -appraisal  of  the  earning  power  of  a 
property  or  of  a  company.  In  the  case  of  a  circumscribed  property  it  is 
often  possible  to  fix  a  valuation  from  purely  physical  considerations; 
but  in  the  case  of  corporations  doing  a  general  mining  business  there  are 
brought  into  prominence  the  technical  and  financial  ability  of  the  manage- 
ment and  the  financial  state  of  the  corporation.  By  the  last  considera- 
tion we  mean  whether  it  is  in  debt  or  not  and  whether  its  indebtedness 
can  easily  be  disposed  of,  or  whether  the  debts  will  drown  the  earning 
power  of  the  property  rendering  the  equity  of  it  only  nominal  value. 

Now  in  the  case  of  mining  property  of  all  kinds  there  is  one  salient 
fact  that  should  never  be  forgotten  for  a  moment,  namely,  that  it  is  a 
wasting  asset  which  is  always  in  process  of  distribution.  This  is  true 
whether  we  are  to  consider  only  a  single  producing  unit  or  a  vast  aggregate 
of  such  units. 

A  mine  has  been  likened  to  a  bank  account.  The  analogy  with  an 
account  in  a  going  bank  is  imperfect,  because  such  an  account  may  be 


VALUE  OF  MINING  PROPERTY  25 

swelled  by  new  deposits,  while  new  ore  cannot  be  added  to  that  which  a 
mining  property  already  possesses,  although  the  actual  amount  may  not 
be  known  until  the  property  is  exhausted.  With  an  account  in  a  bank 
being  wound  up  by  a  receiver,  however,  the  analogy  is  absolute.  The 
receiver,  as  he  realizes  on  the  assets,  pays  the  account  back  to  its  owner 
in  instalments  which  are  called  dividends.  Dividends  from  mining 
property  are  of  precisely  the  same  nature,  namely,  they  are  not  interest 
on  capital  which  remains  unimpaired,  but  are  the  capital  itself  distributed 
in  instalments.  When  the  last  asset  is  realized,  the  payment  of  instal- 
ments ceases  and  nothing  is  left. 

It  would  be  a  considerable  public  service  if  one  could  make  clear  to 
investors  the  difference  between  an  ordinary  investment  and  a  mining 
investment.  What  is  an  ordinary  investment?  The  term  may  describe 
real  estate,  railroad  securities,  mortgages,  etc.,  in  which  the  property 
is  permanent  and  in  which  it  is  assumed  that  the  principal  will  remain 
intact.  The  question  that  determines  the  value  of  such  property  is: 
What  annual  income  does  it  yield? 

In  the  case  of  a  mining  property  two  concurrent  questions  must  be 
answered  in  order  to  determine  its  value :  What  will  be  the  sum  total  of 
\  dividends?$hd)how  long  will  it  take  to  realize  them? 
//  f  *-'  Known  and  Unknown  Ore  Reserves. — It  must  be  confessed  that  many 
of  the  conclusions  drawn  by  mining  engineers  in  answer  to  these  questions 
have  been  proved  false.  The  explanation  is  that  such  engineers,  like 
other  people,  are  imposed  upon  by  the  fashionable  opinions  of  a  particular 
time.  We  have  passed  through  a  period  in  which  it  was  an  intellectual 
habit  to  lay  too  much  stress  on  ore  "in  sight,"  the  "estimation  of  ore- 
reserves,"  and  to  engage  in  a  line  of  reasoning  warped  by  a  fundamental 
misconception  and  bound  to  lead  to  an  incorrect  result. 

A  valuation  of  a  mine  based  upon  a  given  ore  reserve  must  generally 
contemplate  that  the  value  of  the  property  will  decline  year  by  year  as 
those  reserves  are  encroached  upon.  This  indeed  may,  and  does,  happen. 
But  there  are  innumerable  cases  where  it  does  not  happen  and  these  cases 
are  generally  those  of  the  best  mines.  There  are  plenty  of  mines  that 
had,  say,  three  years  ore  in  sight  twenty  years  ago,  or  ten  years  ago.  If 
the  ore  in  sight  were  a  measure  of  their  value  these  properties  would 
long  ago  have  been  exhausted  and  forgotten :  but  in  fact  these  very  mines 
may  be  producing  several  times  as  much  and  may  be  worth  several  times 
as  much  as  they  were  at  the  beginning  of  the  period,  and  today  they  may 
still  have  the  same  three  years  ore  in  reserve.  Almost  all  the  greatest 
mines  in  the  West  are  examples,  specifically  the  mines  at  Butte,  Coeur 
d'Alene,  Park  City,  Tintic,  Cripple  Creek,  Bisbee,  Clifton-Morenci, 
Globe,  Jerome,  Cananea — most  of  the  great  copper  and  lead  mines  of  the 
country  and  of  the  world.  Even  the  "Porphyry  Copper"  mines  are  no 
exception,  nor  are  the  copper  and  iron  mines  of  Lake  Superior.  In  short 


26  THE  COST  OF  MINING 

there  has  been  so  much  confusion  of  ideas  between  the  measuring  of  ore 
reserves  and  the  other  factors  that  determine  the  progress  of  mining  that 
some  discussion  of  the  matter  does  not  seem  out  of  place. 

There  are  certain  historical  circumstances  that  have  had  an  important 
bearing  on  the  development  of  ideas  on  this  subject.  I  remember  some 
twenty  years  ago  hearing  Mr.  W.  E.  Newberry,  a  well  known  mining 
engineer  at  that  time,  remark  that  if  one  would  give  him  the  first  five 
hundred  feet  of  a  mine  he  would  take  that  part  in  exchange  for  all  the 
rest.  Mr.  Newberry's  experience  had  been  chiefly  in  the  gold  and  silver- 
lead  mines  of  Colorado  and  elsewhere.  At  that  time  his  conclusion 
based  upon  his  experience,  was  not  in  the  least  illogical.  The  facts  were 
that  up  to  that  time  the  mining  of  lead,  silver  and  gold  in  this  country 
and  throughout  the  world  was  conducted  mainly  in  the  zone  of  "  second- 
ary enrichment"  or  oxidation.  The  processes  in  general  use  were  those 
that  dealt  with  such  ores.  Gold  ores  were  expected  to  be  " free-milling," 
that  is  amenable  to  the  simple  process  of  stamp-milling  and  amalgama- 
tion. Silver  lead  ores  were  quite  generally  found  to  be  products  of  a 
natural  concentration  of  lower-grade  original  masses  of  zinc,  lead  and 
iron  sulphides.  It  was  profitable  to  ship  the  small  bodies  of  rich  galena 
or  carbonate  to  custom  smelters;  the  cases  in  which  it  would  pay  to  put 
up  expensive  plants  to  treat  the  mixed  ores  were  at  that  time  few  and 
far  between.  The  capital  for  such  enterprises  was  not  easily  to  be  found 
and  it  was  hazardous  to  advise  the  investment  of  it.  The  necessary 
development  of  the  art  of  mining;  the  cyanide  process,  the  flotation  proc- 
ess, large  scale  application  of  power,  adequate  transportation,  etc.,  was 
either  not  yet  perfected  or  not  generally  applied.  But  this  was  not  all: 
the  zone  of  secondary  enrichment  very  frequently  increased  the  width 
of  veins  by  causing  depositions  in  the  walls.  Passing  through  this,  one 
was  confronted  by  three  formidable  changes — lower-grade  ore,  diminished 
volume  and  a  chemical  composition  different  from  that  encountered 
before,  requiring  for  utilization  new  processes  which  might  either  not 
exist  or  be  commercially  inapplicable.  What  more  natural  than  to 
suppose  that  all  these  facts  were  equivalent  to  the  actual  "playing  out" 
of  the  deposit?  Instance  could  be  piled  on  instance,  in  all  parts  of  the 
world,  where  mines  came  to  an  abrupt  end,  as  money  makers,  from  these 
causes. 

Scientific  theory  seized  upon  these  factors  and  gave  weight  to  them 
to  an  extent  far  beyond  the  degree  which  subsequent  developments  have 
warranted.  In  the  Lake  Superior  iron  ranges,  Van  Hise  perceived  that 
the  commercial  ore  bodies  were  concentrations  of  iron  oxides  coincident 
with  oxidation  proceeding  from  the  surface.  In  other  regions  such  oxida- 
tion had  rarely  been  found  to  go  below  one  thousand  feet  from  the  surface. 
What  more  natural  than  to  assume  that  it  would  go  no  deeper  in  Lake 
Superior  and  that  the  iron  ore  bodies  would  go  no  deeper?  The  reasoning 


VALUE  OF  MINING  PROPERTY  27 

seemed  so  probable  as  to  be  almost  conclusive;  and  geologists  twenty-five 
years  ago  felt  no  confidence  in  those  deposits  extending  much  below  the 
bottom  of  the  mines  as  they  were  developed  at  that  time.  Mining  men 
followed  their  example.  In  the  great  development  made  since  that  time 
innumerable  instances  have  been  found  where  Van  Hise's  expectation 
of  a  limited  depth  has  been  found  to  be  true;  for  instance  on  the  Mesabi 
Range  where  scarcely  a  deposit  has  gone  below  500  feet.  But  in  other 
districts,  such  as  the  Gogebic,  Marquette  and  Menomince  Ranges,  his 
expectation  was  not  true;  great  ore-bodies  have  been  found  at  depths 
approaching  3,000  feet  and  the  limit  of  commercial  availability  is  still 
unpredictable. 

But  it  is  easily  seen  that  reasons,  both  of  fact  and  inference,  were  very 
strong  for  an  attitude  of  caution.  Mining  engineers  were  naturally 
anxious  that  the  clients  whom  they  advised  should  not  lose  money  and 
the  danger  of  losing  it  through  a  rash  confidence  in  the  persistence  of  ore- 
bodies  to  any  great  depth,  or  distance,  beyond  actual  disclosures  seemed 
very  great. 

During  the  past  ten  years  much  has  been  done  to  show  the  inadequacy 
of  the  conclusions  that  would  be  based  on  this  line  of  reasoning.  In 
important  districts  where  a  portion  of  the  earth's  crust  is  permeated  by 
an  extensive  mineralization  the  matter  of  finding  ore  is  a  perpetual  and 
integral  part  of  the  process  of  extracting  it.  Before  such  a  district  is 
worked  out  the  openings  grow  in  length  to  hundreds,  or  thousands,  of 
miles;  and  the  cost  of  them  grows  into  millions  and  scores  of  millions  of 
dollars.  To  expect  all  this  or  even  a  respectable  fraction  of  it  to  be  done 
in  advance  of  the  extraction  of  ore  is  simply  out  of  the  question.  The 
management  that  would  venture  to  embark  capital  in  such  a  project 
would  involve  the  company  in  hopeless  insolvency  and  a  stock  holder 
might  reasonably  ask  for  a  receivership  from  the  courts  on  the  ground 
that  funds  were  being  misapplied.  The  objections  to  such  a  course  would 
not  be  wholly  financial  either.  In  most  cases  there  would  be  physical 
difficulties  in  finding  the  ore  by  a  mere  process  of  advance  exploration,  for 
unless  some  of  it  were  removed  the  miner  wrould  have  no  intelligent  means 
of  conjecturing  where  to  look  for  the  extensions.  A  body  of  ore  in  solid 
rock,  we  must  remember,  is  enclosed  not  by  lines  or  areas  but  by  volumes. 
Suppose  we  have  made  a  discovery  of  such  ore  and  we  wish  to  explore  its 
continuation  and  form  an  idea  as  to  its  extent;  suppose  we  enclose  our 
discovery  in  an  imaginary  cube;  do  we  not  have  to  remember  that  a  cube 
has  six  sides?  If  the  ore  body  pursues  an  irregular  and  erratic  course 
through  the  rock  can  it  not  go  out  of  your  cube  through  any  one  of  those 
six  sides?  If  so,  what  geometrical  areas  is  it  necessary  to  explore  before 
you  are  sure  that  the  ore  body  does  not  pass  through  one  of  those  sides? 
Is  it  not  better,  instead  of  trying  to  traverse  a  cubic  volume  of  rock 
with  exploratory  openings,  merely  to  make  the  farther  openings  in  the 


28  THE  COST  OF  MINING 

ore  itself,  and  to  find  the  continuation  of  the  ore  merely  by  the  continua- 
tion of  your  profitable  mining?  All  these  questions  inevitably  answer 
themselves  in  the  miner's  mind  before  he  has  gone  very  far.  He  learns, 
but  sometimes  does  not  state  very  clearly,  that  if  the  mine  is  any  good, 
it  is  impossible  to  do  in  advance  development  work  that  will  take  the 
measure  of  it.  Instead  of  measuring  the  mine  by  the  amount  of  ore  he 
has  in  reserve,  he  learns  how  much  work  he  must  do  and  how  much  money 
he  must  spend  in  order  to  open  up  enough  ore  to  keep  up  his  output,  and 
he  does  no  more  work  and  spends  no  more  money  than  he  has  to.  He 
studies  the  geology  and  tries  to  get  as  accurate  an  idea  as  possible  of  the 
distribution  and  manner  of  occurrence  of  his  ore  bodies,  so  as  to  save 
work  and  money  in  opening  them  up.  Deliberately  and  intelligently  he 
often  defers  looking  for  extensions  of  ore  bodies  until  mining  work  has 
proceeded  far  enough  to  give  him  a  good  idea  where  to  look. 

Thus  development  work  to  a  mine  maybe  likened  to  food  to  an  animal, 
if  it  is  not  supplied  the  mine  will  die  of  starvation.  Just  as  an  animal 
will  die  some  time,  even  though  it  never  suffers  for  want  of  food,  so  the 
mine  will  die  some  time  even  if  it  never  suffers  from  want  of  development. 
A  man  does  not  concern  himself  much  with  a  calculation  of  how  much  a 
horse  will  eat  in  its  whole  life,  but  rather  with  how  much  it  requires  every 
day.  He  does  indeed  take  note  whether  his  horse  is  young  or  old,  strong 
or  weak,  and  values  him  accordingly.  He  does  the  same  with  his  mine, 
recognizing  its  stage  of  life  and  basing  his  expectation  of  its  productive 
power  on  that  recognition,  but  until  it  actually  expires  he  never  ceases 
developing  it.  He  gives  it  the  amount  of  development  which  he  finds 
gives  the  best  financial  results,  just  as  he  gives  his  horse  the  amount  and 
quality  required  to  keep  the  horse  in  the  best  condition:  that  is,  if  he 
can  afford  it.  If  an  owner  cannot  afford  to  develop  his  mine  properly 
the  mine  suffers,  just  as  his  horse  would  suffer  if  he  is  not  fed  properly. 
In  either  case  the  question  can  be  worked  out,  and  is  worked  out  in  a 
practical  way. 

Thus  for  instance;  the  Anaconda  mines  at  Butte,  where  for  many  years 
the  question  of  exploration  has  been  studied  scientifically  and  compre- 
hensively, yield  about  120,000  tons  of  ore  to  each  mile  of  development 
work;  the  Copper  Queen  at  Bisbee,  Arizona,  about  50,000  tons  per  mile, 
the  Chief  Consolidated  at  Tintic,  Utah,  about  20,000  tons  per  mile; 
the  iron  mines  of  Michigan  from  150,000  to  500,000  tons  per  mile,  and 
so  on.  In  each  case  mentioned,  these  mines  or  at  least  the  districts  in 
which  they  occur  are  forty  years  old,  or  more,  and  have  been  producing 
continuously  on  the  same  terms  more  or  less  but  at  an  increasing  rate. 
In  the  various  instances  mentioned  the  amount  of  ore  blocked  out  in 
such  a  way  as  to  be  measurable  varies  between  about  six  months  and 
about  five  years  production,  and  varies  from  time  to  time  in  each  prop- 
erty. The  satisfaction  that  comes  to  the  owners  from  increased  dis- 


VALUE  OF  MINING  PROPERTY  29 

coveries  is  almost  invariably  an  increased  output,  not  the  assurance  of 
a  longer  life. 

The  difference  of  attitude  which  would  be  justified  now  in  expecting 
continued  life  for  many  of  these  properties,  compared  to  that  which  would 
have  seemed  to  be  justified  twenty  years  ago  is  to  be  explained  by  the 
fact  that  many  restrictions  on  the  availability  of  ore  deposits  have  been 
removed.  This  applies  to  large  groups  of  mines.  The  steady  improve- 
ment of  the  cyanide  process  of  gold  extraction  has  removed  practically 
all  the  difficulties  of  working  gold  ore  in  the  primary  zone.  The  whole 
deposit  is  now  profitable,  not  merely  such  part,  often  a  small  part,  as 
might  have  been  rendered  available  by  the  accident  of  one  natural  process 
having  been  superimposed  upon  another  natural  process.  Similarly  in 
lead,  copper,  silver  and  zinc,  the  oil  flotation  process  and  other  improve- 
ments in  concentration  have  removed  difficulties  that  were  then  formid- 
able. There  is  seldom  any  longer  an  absolute  dependence  on  natural 
alterations  and  concentrations  and  in  general  a  mineralized  mass  may  be 
worked  so  long  as  it  contains  enough  metal,  quite  regardless  of  the 
chemical  combination  in  which  it  occurs. 

Determination  of  Present  Value  from  Known  Factors. — If  these 
questions  can  be  answered  it  is  easy  to  arrive  at  the  value  of  the  property 
as  an  investment.  The  general  principle  at  the  root  of  the  matter  is  that 
the  annual  dividends  must  yield  a  good  annual  interest  on  the  sum  in- 
vested, and  also  permit  a  certain  sum  to  be  set  aside  each  year,  which, 
securely  invested  at  compound  interest,  will  repay  the  investment  when 
dividends  cease  on  the  exhaustion  of  the  mine. 

If  we  take  for  an  example  the  Miami  Copper  Company  we  shall  find 
the  facts  approximately  as  follows : 

The  number  of  shares  is  747,114.  After  five  years  of  operation  this 
concern  had  invested  capital  as  follows : 

For  Mine  Property $1,535,000 

For  Mine  Development 1,417,000 

For  Mine  Construction  of  plants 3,059,000 

For  Mine  Working  capital  (less  current  bills) ....  3,000,000 


Total $9,011,000 

This  represents  a  cost  of  say  $12.00  a  share. 

The  amount  of  ore  remaining  in  the  mine,  of  the  kind  on  which  oper- 
ations were  being  conducted,  was  established  at  18,000,000  tons,  almost 
exactly  13  years  life.  According  to  five  years  experience  the  cost  of 
producing  copper  was  10  cents  a  pound,  the  price  received  15^  cents  and 
the  amount  being  produced  annually  42,000,000  pounds.  The  investor 
believing  these  facts  to  be  established  might  reason  as  follows: 

The  annual  income  might  fluctuate  but  it  would  average  almost 
exactly  $3  a  share  a  year  for  13  years.  His  actual  investment  is  $12  a 


30  THE  COST  OF  MINING 

share.  The  amount  required  as  net  interest  on  this  amount  at  5%  is 
60  cents  a  year.  The  installment  of  capital  required  each  year  for  thir- 
teen years,  to  be  put  into  a  sinking  fund  and  invested  in  gilt  edge  securi- 
ties yielding  4%  net  annually,  in  order  to  restore  the  $12  invested  at  the 
end  of  that  period,  is  72  cents  more.  In  other  words  the  minimum  re- 
turn that  would  satisfy  his  investment  at  5%  interest  and  also  return  his 
principal  in  13  years,  is  $1.32  per  share  or  11%.  That  is  a  general  figure. 
Any  business  limited  to  a  life  of  13  years  must  pay  11%  for  that  period 
or  the  investor  will  suffer  a  loss  either  of  his  principal  or  of  the  normal 
rate  of  interest  which  he  has  every  right  to  expect. 

But  in  this  case  the  income  promised  was  more  than  twice  the  amount 
required  to  cover  his  actual  investment.  In  fact  it  was  worth  whatever 
amount  the  $3  per  share  per  year  would  pay  11%  on.  This  would  be 
$27  per  share;  and  this  was  actually  the  price  of  the  stock  in  1915,  the 
year  in  which  the  record  of  the  property  stood  as  just  described. 

This  matter  will  be  referred  to  more  at  length  in  a  following  chapter. 


CHAPTER  III 

NATURE  AND  USE  OF  CAPITAL 

DISCOVERY  OF  ORE  ELEMENT  OP  ITS  VALUE — INFERIOR  VALUE  OP  DEFERRED  EARN- 
INGS— PLANTS  ARE  SELDOM  ADEQUATELY  DESIGNED  IN  ADVANCE — TIME  REQUIRED 
FOR  LAUNCHING  AN  ENTERPRISE WORKING  CAPITAL — LENGTH  OF  LIFE  REQUIRED 

TO  JUSTIFY  DOUBLING  THE    SCALE   OF  OPERATIONS EXAMPLE  OF  MlAMI  COPPER 

COMPANY — EARNINGS  UPON  INVESTMENTS  IN  PLANT  TEND  TO  DECREASE — 
FALSE  INFERENCES  FROM  OCCASIONAL  BONANZA  EARNINGS.  CAPITAL  £Rfr  SOCIAL 
THEORIES — ACCELERATION  OF  PUBLIC  OPINION  IN  CERTAIN  DIRECTIONS  DURING 
WAR  TIMES.  TEMPORARY  MEASURES  SOMETIMES  HAVE  PERMANENT  EFFECTS — 
CAPITAL  LOST  OR  GAINED  ACCORDING  TO  FAILURE  OR  SUCCESS  OF  ENTERPRISE — 

ITS  TRUE  MEASURE   IS  PRESENT  VALUE  OF  PROPERTY. 

The  price  at  which  mine  products  are  sold  is  not  determined  wholly 
by  the  cost  of  extracting  them,  but  frequently  by  the  difficulty  of  discov- 
ering them.  Once  found  an  ore-body  is  a  prize,  that  is,  if  it  is  rich  enough, 
and  its  value  is  established  even  if  it  lies  in  parts  of  the  world  remote 
from  the  centers  of  industry.  It  is  obviously  no  test  of  the  highest 
efficiency  merely  to  make  such  a  mine  pay.  The  real  test  is  to  secure 
from  it  the  greatest  value  possible.  This  problem  involves  not  only 
the  skill  of  the  explorer  and  the  miner,  but  also  some  consideration 
of  the  use  and  purposes  of  capital  in  ways  not  entirely  obvious  at  first 
glance. 

DEFERRED  PAYMENTS 

One  of  the  first  considerations  of  this  nature  is  the  plain  fact  that  the 
promise  of  a  dollar  at  some  distant  date  is  not  as  valuable  as  its  immediate 
possession.  This  is  just  as  true  of  incomes  as  of  single  payments.  It 
requires  little  argument  to  convince  a  man  that  if  he  is  to  receive  a  total 
income  of  $10,000,  he  would  be  better  off  to  get  it  in  10  years  than  in 
twenty,  better  off  to  get  it  in  five  years  than  in  ten;  still  better  to  get  it  in 
hand  at  once.  As  a  matter  of  fact,  if  interest  on  money  is  worth  5  per 
cent,  a  year,  his  $10,000  if  paid  in  installments  covering  twenty  years 
would  be  worth  barely  $6,000  at  present;  if  he  could  get  it  in  ten  years  it 
would  be  worth  $7,500;  in  five  years  $8500;  only  if  paid  immediately 
would  it  be  worth  the  full  $10,000.  If  the  same  ultimate  return  should 
be  spread  over  an  indefinitely  long  period,  say  100  years,  his  annual  in- 
come would  only  be  $100  and  his  capital,  that  is,  the  value  of  his  posses- 
sion, would  only  be  such  a  sum  as  $100  would  be  fair  interest  on;  a  paltry 
$2000.  These  are  surely  not  considerations  merely  for  the  banker  or  the 

31 


32  THE  COST  OF  MINING 

financier,  but  apply  with  equal  or  greater  force  to  any  one  to  whom  the 
possession  of  goods,  the  acquisition  of  food,  clothing  and  comforts,  is  a 
matter  of  importance.  From  this  consideration  it  is  a  short  step  to 
perceive  that  an  indefinitely  long  continuance  of  income  which  can  never 
total  more  than  a  certain  amount  is  not  a  good  point  but  is  distinctly  a 
bad  one,  so  bad  that  it  would  be  excellent  business  to  spend  money  to 
remedy  it. 

These  considerations  have  a  very  wide  application  in  the  mining 
business.  An  ore-body,  the  discovery  of  which  is  valuable,  is  invariably 
limited  in  extent.  If  it  were  not  limited,  either  its  discovery  would  not 
be  valuable  or,  a  single  discovery  would  serve  all  future  purposes,  which 
would  be  the  same  thing.  Therefore,  the  miner  attacks  his  deposit 
fully  convinced  that  it  contains  only  a  certain  quantity  of  valuable  prod- 
uct; that  it  is  worth  while  for  him  to  secure  and  enjoy  this  product 
as  soon  as  possible  instead  of  waiting  indefinitely  for  a  slow  dribble  of 
output;  and  that  his  problem  is  to  explore  the  mine  intelligently  so  as 
to  equip  it  in  order  that  its  working  may  afford  the  maximum  satisfac- 
tion to  the  owners.  This  problem  may  be  reasonably  stated  as  that 
of  creating  the  greatest  present  value  for  the  property. 

Present  Value. — From  this  point  of  view,  to  my  mind  a  just  one,  it 
will  be  found  that  the  business  enterprise  based  on  a  limited  deposit  will 
have  a  life  of  maximum  desirability.  Many  writers  on  the  economics 
of  mining,  such  as  H.  C.  Hoover,  Ross  E.  Browne  and  H.  L.  Smyth,  have 
given  examples  which  seem  to  show  that  discovered  ore,  or  even  the  entire 
mine,  should  theoretically  be  worked  out  in  a  very  short  time,  say  from 
three  to  nine  years.  This  is,  of  course,  provided  that  there  are  no  exterior 
obstacles  such  as  the  danger  of  over-supplying  markets,  to  prevent  it. 
It  appears,  however,  that  the  length  of  life  which  will  create  the  maximum__ 
present  value  is  inherently  a  variable  depending  on  the  relative  value  of 
the  capital  required  and  the  total  value  of  the  product,  upon  the  rate  of 
annual  profit  earned  upon  the  capital  used  in  constructing  and  operating  \ 
the  plant,  and  upon  the  time  required  to  put  the  plants  in  operation. 
Where  the  annual  return  on  the  invested  capital  is  high  the  life  should 
be  short,  but  when  that  return  diminishes  toward  an  amount  such  as 
will  be  only  interest  on  money  the  inducement  to  invest  further  capital 
for  the  purpose  of  hurrying  output  diminishes  until  it  finally  disappears 
altogether.  When  the  return  on  capital  is  a  mere  interest  rate  the  life ' 
of  the  enterprise  has  to  be  indefinitely  long  in  order  to  justify  the  invest-  * 
ment  at  all.  At  this  point  indeed  the  argument  for  the  investment  of 
further  capital  would  be  the  same  as  would  induce  investment  in  govern- 
ment bonds — merely  that  one  might  have  it  to  invest;  and  the  effort  and 
risk  involved  in  initiating  and  managing  an  enterprise  would  go  uncom- 
pensated.  At  this  point  of  course  there  will  be  no  inducement  for  enter- 
prise and  there  will  be  none. 


NATURE  AND  USE  OF  CAPITAL  33 

Fundamentals  of  Enterprise. — For  several  reasons  that  will  be  de- 
veloped presently,  these  considerations  promise  to  have  greater  weight 
in  the  mining  business  of  the  United  States,  perhaps  in  the  world  at  large, 
than  they  have  had  in  the  past  and  it  seems  worth  while  to  dwell  upon 
them.  As  a  foundation  for  the  discussion  let  us  first  note  the  general 
conditions  of  a  mining  investment.  It  naturally  includes  as  essential 
elements,  opportunity,  time,  effort  and  cash,  the  value  of  all  of  which 
can  of  course  be  expressed  in  money. 

Omitting  from  the  question  of  opportunity  the  matter  of  ownership, 
we  may  put  down  as  a  minimum  the  occurrence  of  ores  in  paying  amounts. 
It  is  a  point  quite  often  overlooked  that  there  is  an  essential  difference 
between  merely  knowing  that  an  ore-body  exists  and  having  it  so  opened 
up  that  an  output  may  be  obtained  from  it.  There  are  plenty  of  ores 
known  to  exist,  from  mere  geological  observation  or  inference,  or  from 
drilling  or  some  other  form  of  exploration.  This  information  is  absolutely 
essential  to  the  initiation  of  an  industrial  investment  and  of  course  it 
must  be  paid  for. 

Delays. — Once  the  decision  is  made  to  follow  up  these  discoveries  a\ 
considerable  time  is  necessary  for  opening  up  and  equipping  the  mine, 
transportation  system,  mills  and  smelteries,  in  general  terms  the  required , 
plant.  In  making  and  carrying  out  the  plans  for  all  this  work  there  is 
abundant  opportunity  for  mistakes,  delays  and  the  deficiency  of  human 
comprehension  and  foresight.  These  are  factors  that  are  quite  generally 
optimistically  minimized.  Why  is  it  that  if  you  plan  a  house  to  cost 
$3000,  and  let  it  on  contract  at  that  price  that  you  find  when  it  is  finished 
that  it  has  cost  you  $4500?  Simply  because  neither  you  nor  your  con- 
tractor could  think  of  everything  that  had  to  be  done.  When  the  con- 
tract is  finished  you  find  the  house  is  not  finished.  This  involves  you 
both  in  additional  expense  and  in  unexpected  delay;  for  you  will  cer- 
tainly not  be  satisfied  with  an  unfinished  house,  it  will  be  nothing  short 
of  a  desolate  disappointment.  If  you  cannot  afford  to  go  on  with  it  you 
will  have  to  confess  it  a  failure.  The  next  time  you  build  a  house,  of 
course,  you  will  be  on  your  guard  against  these  contingencies  that  you 
cannot  foresee.  You  do  not  know  exactly  what  the  "  unforeseeable " 
will  turn  out  to  be,  but  you  know  it  is  there. 

This  homely  comparison  illustrates  an  element  of  every  engineering 
project.  It  is  particularly  worth  remembering  that  the  industrial  arts, 
including  mining,  have  been  for  a  long  time,  and  stillare,  in  a  state  of 
evolution.  There  is  no  standardized  plan  or  pattern  of  plant,  operation 
or  organization.  Each  new  group  of  entrepreneurs  may  reasonably 
entertain  hopes  of  improving  upon  their  predecessors,  in  some  respects  at 
least,  and  in  any  event  they  invariably  expect  to  make  special  adjust- 
ments for  their  own  special  conditions.  Nothing  is  more  common  than 

to  change  plans  even  after  actual  construction  has  begun,  even  on  large 

3  •'..., 


34  THE  COST  OF  MINING 

scale  plants;  indeed  sometimes  the  changes  take  the  radical  form   of\ 
increasing  the  whole  scale  of  operations,  perhaps  to  take  advantage  of] 
further  developments  of  ore  or  to  provide  for  working  additional  property.  ! 
Thus  while  American  engineering  projects  are  generally  carried  out 
energetically  and  promptly  and  on  a  large  scale,  it  is  quite  imaginary  to* 
count  upon  them  as  being  products  either  of  invincible  skill  or  of  unerring^ 
judgment.     They  invariably  cost  more  time  and  money  than  is  foreseen 
and  planned  for.     The  large  group  of  western  mines  known  as    the 
Porphyry  Coppers  is  an  excellent  illustration  of  all  these  points.     The 
time  required  to  get  a  plant  running  from  the  moment  of  initiation  was 
between  three  and  seven  years.     The  Inspiration  Copper  Company  is  of 
all  these  no  doubt  the  greatest  engineering  success,  but  it  is  at  the  same 
time  an  example  of  all  these  causes  of  delay.     Before  it  was  finally 
launched  as  a  going  concern  its  properties  were  increased  by  various 
consolidations,  its  plants  were  designed  for  different  outputs,  and  con- 
struction was  interrupted  in  order  to  make  a  radical  change  in  milling 
methods — from  water  concentration  to  oil  flotation. 

Time  Required  for  Completion. — Whatever  may  be  said  of  starting  a 
new  plant  may  also  be  said  of  making  radical  additions  to  an  old  one ; 
indeed,  unless  the  original  plant  was  especially  designed  to  be  added  to, 
the  difficulties  are  actually  greater,  for  the  operating  plants  are  quite  apt 
to  get  in  the  way  of  the  additions  and  to  compel  the  engineers  of  the 
enlarged  plant  to  put  up  with  a  scheme  bound  to  be  in  some  respects 
antiquated  and  unsatisfactory. 

Thus  it  seems  that  to  change  the  scale  of  a  mining  operation  is  a 
matter  requiring  from  three  to  seven  years.  We  might  approximate  it  at 
four  years.  Theoretically  such  a  requirement  seems  unreasonable,  but 
if  we  are  to  deal  with  the  business  as  a  practical  matter  of  finance  it  is 
far  safer  to  count  upon  the  actualities  of  experience  than  upon  the  calcu- 
lations of  theory.  Of  course  not  all  plants  require  the  same  amount  of 
time.  The  small  and  rude  plants  required  for  the  shallow  zinc  mines  of 
Southwest  Missouri  and  Oklahoma  may  be  built  and  started  in  a  few 
months.  But  such  plants  are  not  only  unrepresentative  of  the  average  ^ 
conditions  in  the  mining  business  but  they  are,  after  all,  only  partial 
installations.  The  general  tendency  is  toward  elaboration  of  method  and 
comprehensiveness  of  plan.  If  the  operators  in  the  Miami  district 
contemplate  their  business  in  the  aggregate,  say  as  a  matter  of  estab- 
lishing an  output  of  100,000  tons  of  spelter  a  year,  they  will  perceive  that 
this  is  no  problem  of  starting  to  dig  ore  from  a  forty  acre  lease,  but 
of  exploring  thousands  of  acres  of  land  and  of  building  smelteries  and 
power  plants.  Such  an  operation  would  probably  require  the  four 
years  which  we  find  has  been  required  to  start  the  average  western 
copper  mine.  We  may  fairly  assume  that  mines  which  may  be  quickly 
started,  or  quickly  placed  upon  a  new  operating  basis,  are  not  really 


NATURE  AND  USE  OF  CAPITAL  35 

complete  industrial  units  but  merely  minor  parts  of  a  broader  scheme 
already  running.  We  might  almost  say  they  are  not  really  mines,  but 
slopes. 

Here  then  we  find  an  abrupt  practical  limitation  to  theoretical  calcu- 
lations of  present  values.  If  indeed  a  mine  could  be  worked  out  to 
advantage  in  three  years  after  a  plant  is  running  it  is  at  least  an 
embarrassment  to  have  to  wait  four  years  before  it  can  be  started. 

Almost  the  same  observations  apply  to  the  cost  of  plants  as  to  the 
time  required.  A  priori  calculations  are  seldom  adequate.  The  safest 
estimate  will  be  the  one  based  on  the  total  expenditures  that  have  been 
required  for  a  similar  plant. 

Working  Capital. — The  working  capital  is  something  that  it  is  easy 
to  forget  altogether.  The  amount  required  is  usually  equal  to  the  cost 
of  operating  for  between  six  months  and  a  year.  Thus  a  company  which 
expends  $500,000  a  month,  will  need  from  $3,000,000  to  $6,000,000 
working  capital.  Let  us  take  as  an  example  the  Miami  Copper  Company 
again.  We  found  that  concern  in  1915  producing  about  42,000,000 
pounds  a  year.  Its  capital  accounts  stood  as  follows: 

Mine  property $1,535,000 

Mine  development 1,417,000 

Construction 3,059,000 

Working  capital 3,000,000 


Total $9,011,000 

If  at  that  time  it  had  been  considered  desirable  to  double  this  output 
from  the  same  property  we  might  estimate  that  the  scheme  would  not 
have  been  completed  before  1919  and  the  capital  account  for  an  output 
of  84,000,000  pounds  would  have  stood  about  as  follows: 

Mine  property $1,535,000^ 

Mine  development 2,834,000 

Construction 6,118,000 

Working  capital y 6,000,000 

Total  capital  required $16,487,000 

Here  we  have  an  increase  of  capital  amounting  to  nearly  $7,500,000. 
In  1915  the  normal  earnings  were  about  $2,250,000  a  year  and  if  the 
operations  had  been  merely  maintained  on  the  same  scale  in  the  four 
years  required  for  increasing  the  scale  of  operations  the  company  might 
have  paid  $9,000,000  to  its  stockholders;  but  if  the  enlargement  were 
to  be  paid  out  of  earnings,  it  could  only  have  paid  $1,500,000  to  the 
stockholders. 

What  length  of  life  would  be  required  to  justify  this  course? 


36  THE  COST  OF  MINING 

We  have  figured  out  (see  preceding  chapter)  that  in  1915  with  a  life  of 
13  years  the  stock  was  worth  $27  a  share.  It  is  plain  that  the  increase 
we  are  arguing  about  would  not  benefit  the  stockholders  unless  it  would 
increase  the  present  value  of  the  stock,  that  is,  the  value  in  1915.  Of 
course  any  such  increase  would  have  to  be  figured  into  it  from  the  ex- 
pectation of  increased  dividends  to  be  obtained  as  the  result  of  the 
project.  It  is  easy  to  see  how  this  would  work  out  from  the  standard 
calculations  of  the  value  of  a  series  of  installments  of  income  (see  Chapter 
V  on  Partial  and  Complete  Costs) .  The  four  installments  of  reduced 
income  totaling  $1,500,000  equals  50  cents  a  share  for  four  years.  The 
expectation  of  these  payments  was  worth  in  1915  $1.75  per  share.  In 
1919,  the  company  would  go  on  a  basis  of  $6  a  share  for  four  and  one- 
half  years — at  which  time  the  mine  would  be  exhausted.  By  doubling  the 
output  we  have  not  shortened  the  life  of  the  mine  by  one-half,  but  merely 
from  13  years  to  eight  and  one-half  years.  This  is  the  stumbling  block 
to  increasing  value  by  increasing  output;  it  has  to  be  paid  for  by  delay  in 
receiving  earnings.  In  1919  the  value  of  $6  a  share  for  four  and  one-half 
years  would  be  about  $23.  But  this  was  not  the  value  of  these  install- 
ments in  1915.  Nobody  will  pay  $23  for  $23  to  be  paid  four  years  hence. 
One  would  lose  money  unless  he  discounted  the  sum  by  an  amount  which 
would  constitute  interest  on  his  payment  for  those  four  years.  The 
actual  value  in  1915  would  be  about  $19.16  to  which  would  be  added 
$1.75,  the  present  value  of  the  four  minor  installments,  making  a  total 
value  of  $20.91.  But  the  stock  was  worth  on  the  former  basis  $27. 

There  are  many  variations  that  could  be  introduced  into  such  com- 
putations. For  instance,  we  might  take  into  consideration  the  final 
liquidation  of  the  working  capital  which  is  an  asset  that  would  be  worth 
l€ss  to  the  stock  on  the  long  life  basis  than  on  the  shortened  life  basis. 
But  to  go  into  such  niceties  is  wasted  time  in  view  of  the  already  obvious 
fact  that  the  increased  scale  of  operations  is  not  warranted,  but  would 
involve  less  and  wasted  effort,  and  would  be,  in  short,  an  engineering 
and  financial  blunder  of  the  first  magnitude.  But  there  must  be  some 
volume  of  ore  and  some  length  of  life  that  would  justify  doubling  the 
output. 

We  have  been  figuring  on  a  total  of  18,000,000  tons  equivalent  to  13 
years  life  at  1,400,000  tons  a  year.  Let  us  calculate  the  present  value  on 
that  basis  and  On  the  doubled  basis  beginning  in  1915  and  assuming  longer 
lives  for  both  projects. 

SCALE  1,400,000  TONS  A  YEAR  SCALE  2,800,000  TONS  A  YEAR  WITH 

4  YEARS  DELAY 

Tons  Life    Value  per  share  Life  Value,  1915 

21,000,000  15  $30                          9^  $1 . 75  plus  $23 . 00  =  $24 . 75 

28,000,00020  36  12  1.75  plus    31.55=    33.30 

35,000,00025  40.50  14^  1.75  plus    37.75=    40.50 

42,000,00030  44.20  17  1 . 75  plus    45.00=    46.75 


NATURE  AND  USE  OF  CAPITAL  37 

Thus  we  perceive  that  it  is  not  until  the  volume  of  ore  is  doubled  will 
it  pay  to  double  the  scale  of  operations.  The  inference  is  that  the  Miami 
mine  was  skillfully  exploited  in  the  first  places 

These  calculations  must  not  be  confused  with  other  factors  which 
might  (and,  as  a  matter  of  fact,  do)  enter  into  the  situation.  The  output 
of  the  mine  has  actually  been  increased  by  one-half  without  any  cor- 
responding increase  of  plant  cost,  but  merely  on  the  strength  of  minor 
alterations  and  adjustments.  This  fact  does  not  enter  into  my  argument, 
for  the  fact  that  such  adjustments  could  be  made  means  nothing  more 
than  that  the  capabilities  of  the  plant  had  not  been  fully  worked  out 
and  utilized.  Any  increase  of  output,  without  additional  expense  for 
construction,  is  pure  gain.  Anything  short  of  running  a  plant  at  full 
capacity  is  uneconomical.  The  shortening  of  the  life  of  a  mine  by  such 
means,  that  is,  without  the  use  of  additional  capital,  is  so  obviously  ad- 
vantageous that  any  discussion  of  the  arithmetic  of  it  seems  superfluous. 
/  Earnings  upon  Plant  Investments. — The  real  point  of  this  discussion 
remains  to  be  brought  out.  It  will  be  noticed  that  the  earning  power 
of  the  capital  invested  in  plant  and  working  capital  on  the  Miami  ores  is 
30  per  cent,  per  year.  The  minimum  life  required  to  return  this  capital 
with  5  per  cent,  interest  is  3.8  years.  We  have  seen  that  it  will  not  pay 
to  double  the  scale  of  operations  unless  the  life  on  this  scale  exceeds  25 
years.  At  a  smaller  increase  of  capacity,  say  25  per  cent.,  we  find 
that  the  present  value  will  be  increased  slightly  at  a  life  of  less  than  25 
years.  It  is  plain  that  when  the  capital  return  is  30  per  cent,  and  the 
time  required  for  initiating  an  enterprise  is  four  years,  the  scale  of  opera- 
tions to  give  the  maximum  value  should  be  such  as  will  give  a  life  of 
between  20  and  25  years. 

A  consideration  of  a  variety  of  factors  that  might  be  introduced,  such 
as  the  possibility  of  initiating  plants  in  a  shorter  period  than  four  years, 
would  involve  us  in  almost  interminable  arithmetic  and  would  probably 
be  tiresome  without  adding  much  to  the  clarity  of  the  subject.  It  seems 
already  evident  that  the  time  required  for  plant  installations  is  an  im- 
portant element  in  the  problem  of  the  intelligent  use  of  capital  not  only 
in  mining  but  in  industry  in  general,  and  that  where  the  return  on  capital 
is  high  and  the  warrantable  life  of  an  enterprise  short  the  interference  of 
delay  becomes  proportionately  greater.  Thus  if  the  earnings  upon 
capital  are  100  per  cent.,  if  it  requires  four  years  to  start  a  plant  and  if 
the  capital  required  is  in  use  an  average  of  one-half  the  time  required  for 
its  investment,  it  is  plainly  impossible  to  see  any  merit  in  an  enterprise 
that  will  run  less  than  two  years  after  the  plant  is  started.  It  is  rare 
indeed  that  earnings  will  be  so  large,  although  there  have  been  instances 
where  they  have  been  much  greater.  For  example  the  Goldfield  Con-\ 
solidated  mining  and  milling  plant  probably  cost  about  $2,000,000  in 
the  aggregate,  and  required  2J^  years  for  completion,  but  it  immediately 


38  THE  COST  OF  MINING 

began  to  earn  profits  at  the  rate  of  $6,000,000  or  $7,000,000  a  year.  A 
single  year's  operation  would  be  a  recompense  for  both  the  investment, 
the  time  and  the  effort.  But  such  instances  are  merely  spectacular 
accidents  which  are  less  and  less  likely  to  be  repeated.  The  whole 
tendency  of  the  mining  industry  is  toward  less  dependence  upon  the  dis- 
covery of  bonanzas  and  more  dependence  upon  capital  and  sustained 
(industrial  effort.  The  number  of  mining  enterprises  in  this  country 
"that  are  rich  enough  to  warrant  an  operating  life  of  less  than  five  years 
would  probably  constitute  only  a  minute  fraction  of  the  industry, 
certainly  not  worth  public  attention.  There  are  of  course  many  mines 
in  the  country  where  the  earnings  on  the  capital  invested  are  still  hand- 
some, say  from  25  to  50  per  cent.,  but  the  largest  mining  enterprises 
are  already  far  below  that  figure.  In  the  case  of  the  United  States  Steel 
Corporation  the  capital  invested  averaged  before  the  war  no  less  than 
$140  per  ton  of  finished  product  sold  each  year  and  the  earnings  only 
$8,  or  less  than  6  per  cent.  If  money  is  worth  5  per  cent,  interest  the 
shortest  justifiable  life  of  such  an  investment  is  more  than  40  years. 
If  the  earnings  on  capital  are  10  per  cent,  the  shortest  justifiable  life  will 
be  15  years.  It  may  be  worth  while  to  repeat  for  the  sake  of  emphasis, 
that  the  shortest  justifiable  life  is  that  which  wiU_  merely  return  the 
capital  with  such  interest  as  might  be  obtained  merely  by  lending  the 
money  on  good  security.  When  we  come  to  take  account  of  the  dif- 
ficulty of  guarding  against  changes  of  failure  such  as  lie  in  the  over- 
estimate of  the  ore  supply,  underestimate  of  cost,  unfavorable  changes^ 
in  prices,  or  in  absolute  accidents,  it  seems  venturesome  to  count  upori^ 
a  return  as  low  as  10  per  cent,  as  a  safe  margin  for  investment.  In  order 
to  justify  it  we  should  have  to  count  on  exterior  factors,  such  as  a  prob- 
ability that  the  business  would  continue  to  expand  indefinitely  instead 
of  being  limited  to  an  exhaustible  deposit.  Perhaps  we  shall  not  be 
far  astray  if  we  assert  that  the  bulk  of  mining  enterprises  are  based 
upon  a  return  of  between  10  and  50  per  cent,  on  the  capital  required  for 
development,  plant  and  working  capital;  that  these  returns  vary  ac- 
cording to  the  relative  abundance  of  the  materials  dealt  with,  and  that 
the  higher  returns  are  obtainable  only  upon  bonanza  deposits  in  which 
the  mere  discovery  is  a  matter  of  capital  importance. 

Bonanza  Earnings.— These  statements  are  liable  to  be  misunderstood 
unless  the  basis  for  them  is  thoroughly  explained.  It  is  possible  for  one 
intent  upon  showing  the  extraordinary  profits  of  the  mines  to  take  for 
an  example  some  notable  bonanza  and  explain  to  the  public  that  its 
great  earnings  come  from  practically  nothing.  This  is  often  done  for" 
two  diametrically  opposite  purposes.  On  the  one  hand  the  stock  pro- 
moter uses  these  figures  to  tempt  speculation;  on  the  other  hand  theorists 
on  social  systems  use  them  as  examples  to  illustrate  the  inequalities  and 
injustices  of  the  distribution  of  wealth  which  lie  in  "  capitalism."  Both 


NATURE  AND  USE  OF  CAPITAL  39 


representations  are  apt  to  be  full  of  the  errors  of  little  knowledge,  which 
Shakspeare  describes  as  a  "  dangerous  thing."  Let  us  take  as  an  illustra- 
tion the  most  remarkable  mining  bonanza  of  recent  times,  the  United 
Verde  Extension  copper  mine. 

This  property  was  discovered  by  the  present  company  at  a  cost  of 
about  $275,000.  It  immediately  began  shipping  ore  running  more  than 
25  per  cent,  copper  and  within  three  years  under  war  prices  it  was  earn- 
ing at  the  rate  of  $12,000,000  a  year.  These  facts  sound  exceedingly 
extravagant;  but  when  we  come  to  examine  them  in  terms  of  the  normal 
conduct  of  business  we  shall  find  modifications  at  once. 

In  the  first  place,  the  expenditure  of  $275,000  was  not  really  all  the 
money  put  into  this  discovery.  It  was  merely  the  amount  required  to  put 
through  the  fortunate  and  decisive  chapter  of  it,  which  was  the  re- 
organization and  re-financing  of  an  existing  company.  Exploration 
had  previously  been  carried  on  for  many  years  without  success  and  large 
sums  of  money,  I  do  not  know  how  much,  but  certainly  many  hundred 
thousand  dollars,  were  spent.  The  work  and  money  thus  spent  were 
not  lost  but  pom-ted  the  way  to  the  ultimate  success.  Thus  the  actual 
cost  of  the  discovery  must  actually  have  been  near  $1,000,000  instead 
of  $275,000  as  usually  stated.  Furthermore,  the  money  spent  by  this 
company  and  on  this  property  was  only  a  small  part  of  the  amount  spent 
on  account  of  this  very  bonanza;  for  as  soon  as  this  discovery  was  made 
other  explorations  were  undertaken  right  and  left,  in  part  by  the  very 
people  interested  in  the  Verde  Extension,  and  millions  were  put  in  without 
resulting  in  the  discovery  of  even  a  dollar's  worth  of  ore.  The  real 
cost  of  the  discovery,  therefore,  was  not  $275,000  at  all  but  several  mil- 
lions. If  it  were  a  matter  of  importance  the  real  amount  could  be 
determined  with  fair  accuracy. 

The  next  modification  is  that  the  apparent  profits  were  for  a  time 
doubled  by  war  prices. 

A  further  modification  is  that  the  sums  stated  as  earnings  have  not 
been  paid  to  the  stockholders,  but  only  a  quarter  of  them.  They  never 
will  be  paid,  for  they  have  been  used  in  the  construction  of  a  plant,  the 
development  of  the  mine,  for  workings  capital  and  for  war  taxes.  If 
there  had  been  no  war  prices  the  earnings  would  have  been,  in  1916,  1917 
and  1918,  so  much  less  that  the  dividends  would  have  been  certainly 
less  than  half  of  the  $6,667,500  actually  paid. 

Borrowed  Capital.  —  But  the  consideration  that  is  really  obscure 
to  those  who  do  not  take  the  trouble  to  reason  it  out  is  the  fact  that 
whatever  earnings  that  have  gone  to  the  stockholders  really  came  from 
borrowed  capital.  The  new  bonanza  mine  had  no  equipment  of  its  own 
to  enable  it  to  put  copper  on  the  market.  Railroads  have  been  built 
for  other  mines  by  which  smelteries,  also  built  for  other  mines,  could  be 
reached.  The  owners  of  the  United  Verde  Extension  had  to  pay  a  toll 


40  THE  COST  OF  MINING 

out  of  the  richest  of  its  ores  for  the  use  of  that  capital :  it  paid  in  the  form 
of  profit  on  freight  and  treatment.  To  ship  those  richest  ores  was  only  a 
fortunate  and  temporary  expedient.  The  enterprise  needed  a  plant 
of  its  own  in  spite  of  all  the  assistance  of  this  kind  that  it  could  negotiate 
for.  The  construction  of  a  smeltery,  of  a  tunnel  and  railroad  to  connect 
it  with  the  mine,  of  shafts,  machinery,  living  accommodations  for  employee 
(these  being  nothing  short  of  two  townsites,  one  at  the  mine,  the  other 
at  the  smeltery),  the  purchase  of  land  and  the  creation  of  a  working  capital 
have  actually  absorbed  some  $12,000,000  to  $15,000,000.  If  the  work 
had  been  done  under  pre-war  conditions  these  requirements  would  have 
been  smaller,  by  perhaps  a  third.  But  the  mine  cannot  continue  to  ship 
the  extraordinary  ores  that  were  obtained  in  these  first  years,  and  its 
earnings  certainly  will  not  average  as  much  as  50  per  cent,  on  the  capital 
required  to  establish  and  operate  it. 

The  individuals  who  put  through  the  reorganization  of  this  company 
reaped  extraordinary  profits.  They  drew  a  capital  prize  in  the  lottery  of 
nature  by  paying  for  only  one  of  the  tickets.  It  is  equally  true  that  they 
used  this  prize  with  skill  and  acumen  and  out  of  it  built  up  an  extensive 
industry  by  using  a  part  of  their  prize  as  capital.  It  is  a  first  rate  example 
of  adventure  and  success;  the  kind  of  enterprise  that  has  been  the  very 
life  of  the  mining  industry,  keeping  alive  the  desire  for  fresh  efforts,  and 
lending  zest  and  even  romance  to  the  development  of  the  country.  There 
are  certain  elements  in  our  national  situation  which  make  it  worth 
while  to  inquire  whether  this  sort  of  enterprise  is  to  continue  freely  or 
whether  it  is  to  be  curtailed  and  discouraged.  The  importance  of  this 
question  has  been  accentuated  by  the  war  through  the  increase  of  taxa- 
tion that  is  the  invariable  concomitant  of  wars. 

There  is  no  question  that  the  mining  industry  should  pay  its  full 
share  to  support  the  government  and  every  national  enterprise  in  pro- 
portion to  its  income  and  profits.  But  it  is  exposed  to  the  danger  of 
confiscation  of  capital  under  the  guise  of  " income"  and  " excess  profits." 
The  manner  in  which  this  may  be  done  may  readily  be  gathered  from  the 
preceding  discussion  and  examples.  The  revenue  law  of  1918  was  passed 
at  the  very  time  when  the  wave  of  enhanced  profits  due  to  high  war  prices 
was  rapidly  receding.  Costs  were  rising  by  leaps  and  bounds  and  prices 
were  either  fixed  or  falling;  profits  were  really  not  much  above  normal 
and  promised  soon  to  become  sub-normal.  The  law  carried  a  provision 
for  taxing  " excess  profits"  up  to  as  much  as  80  per  cent.,  and  the  question 
of  the  amount  of  profit  was  to  be  determined  not  by  the  relation  of  the 
war  earnings  on  an  ounce  of  gold  or  a  pound  of  copper  to  the  normal 
earnings  on  an  ounce  of  gold  or  a  pound  of  copper,  but  was  to  be  fixed  by 
the  nominal  capital  of  the  enterprise.  For  instance  there  was  acute  danger 
that  according  to  this  law  the  capital  of  the  United  Verde  Extension  would 
be  put  down  at  fifty  cents  a  share,  10  per  cent,  allowed  on  this  value 


NATURE  AND  USE  OF  CAPITAL  '  41 

for  normal  profits  and  the  remainder  taxed  80  per  cent,  as  "  excess 
profits."  In  the  meantime  many  persons  had  bought  this  stock  at  over 
$40  a  share  on  an  expectation  of  normal  profits,  that  is,  not  counting  upon 
war  prices  at  all,  and  the  actual  profits  were  little,  if  any,  above  what 
might  have  been  earned  in  ordinary  times.  According  to  the  plan  of  the 
law  80  per  cent,  of  the  earnings  would  be  swept  away.  On  these  terms 
four-fifths  of  the  capital  of  actual  investors  would  be  confiscated.  There 
were  two  questions  that  might  logically  be  considered  (1)  what  was  the 
normal  profit  of  the  product  of  this  industry?  (2)  what  was  the  capital 
in  this  industry? 

Before  proceeding  with  the  second  point  it  may  be  reasonable  to 
interject  that  an  excess  profit  tax  on  real  excess  profits,  as  a  war  measure, 
could  hardly  be  objected  to.  It  will  be  shown  elsewhere  in  this  volume 
that  the  United  Verde  Extension  might  under  average  pre-war  conditions 
expect  to  make  10  cents  profit  per  pound  of  copper.  Now  if  it  were 
making  during  the  war  20  cents  it  would  be  not  unreasonable  to  say  that 
it  was  making  10  cents  " excess  profits."  A  tax  of  80  per  cent,  of  that 
amount  even  in  addition  to  other  ordinary  income  taxes  would  not  be 
confiscation.  But  the  question  would  not  necessarily  be  disposed  of  even 
at  that  point  for  it  would  still  be  necessary  to  scrutinize  the  receipts  and 
expenditures  of  all  mines  according  to  a  uniform  principle  in  order  to 
fix  the  amount  of  profit  fairly.  There  would,  however,  be  no  objection 
to  the  theory  if  it  could  be  properly  applied. 

It  is  hardly  to  be  expected  that  the  American  nation  will  be  influenced 
permanently  by  the  psychology  of  a  war  period.  There  is  no  immediate 
prospect  of  more  wars  in  the  future  than  there  have  been  in  the  past. 
Since  the  Revolution  this  country  has  been  engaged  in  wars  of  greater  or 
less  importance  about  7  per  cent,  of  the  time,  and  its  ordinary  dispo- 
sition is  to  dismiss  the  question  of  war  as  an  abnormal  and  improb- 
able contingency.  Nevertheless,  steps  are  taken  during  these  occasional 
wars  that  have  unexpected  results  in  times  of  peace.  A  tariff  to  provide 
war  revenue  may  be  converted  into  "  protection, "  a  policy  which  may  or 
may  not  merely  favor  some  industries  at  the  expense  of  other  industries. 
A  temporary  stopping  of  brewing  and  distilling  has  been  converted  by 
war  psychology  into  permanent  and  constitutional  prohibition  much 
sooner  than  would  have  been  the  case  normally.  Similarly  the  marked 
increase  of  taxation  on  incomes,  as  a  war  measure,  may  develop,  or 
degenerate,  into  a  deliberate  and  sustained  attack  on  capital.  Govern- 
ment administration  of  railroads  as  a  temporary  expedient,  may  be  the 
chrysalis  of  government  ownership.  The  net  result  may  be  to  multiply 
the  number  of  government  employees,  multiply  the  weight  of  the  machinery 
of  government  and  substitute  for  the  independence  of  individual  initia- 
tive a  general  dependence  upon  government  employment.  There  are 
many  wh  regard  all  these  tendencies  as  desirable,  indeed  look  upon  any- 


42  THE  COST  OF  MINING 

thing  that  can  secure  a  majority  of  votes  as  not  only  desirable  but  sacred. 
It  is  hardly  worthwhile  to  have  fixed  opinions  as  to  the  merits  of  such 
tendencies;  it  is  more  to  the  point  to  discern  if  possible  how  powerful  they 
are  and  what  forces  lie  behind  them.  To  make  such  an  analysis  is  en- 
tirely beyond  the  scope  of  this  discussion,  but  it  seems  as  if  we  cannot 
be  far  wrong  in  drawing  a  general  conclusion  that  the  mainspring  of  most 
of  the  tendencies  of  social,  political,  and  economic  legislation  is  faith  in 
cooperative  effort  as  against  individual  effort,  and  doubt  as  to  whether 
this  cooperative  effort  may  properly  be  left  to  individual  owners.  The 
efficiency  of  great  corporations  has  been  demonstrated  in  many  indus- 
tries; would  not  still  greater  corporations,  even  one  all  embracing 
corporation,  the  government  itself,  be  still  more  efficient?  Would  not 
such  an  institution  automatically  make  us  all  comfortable  and  relieve 
us  of  the  terrors  of  making  a  living? 

Private  Ownership  a  Fundamental  Law. — But  this  idea  is  still  only 
a  theory  and  will  undoubtedly  remain  so.  It  is  easy  to  see  how  the  coopera- 
tive or  integrating  movement  will  reach  absolute  limits,  in  the  form  of 
intricacies  of  detail  which  would  be  beyond  the  power  of  any  corporation 
to  master.  When  the  tendency  to  integration  is  forced  by  its  momentum 
beyond  its  proper  boundary  it  is  bound  to  be  overcome  by  the  reaction 
of  disintegration.  The  right  of  private  ownership  of  property  is  still 
recognized  by  the  fundamental  law  of  the  land.  It  is  a  natural  desire 
of  every  man  to  have  something  of  his  own  which  he  can  alter,  dispose  of, 
or  lend  to  suit  his  own  whim.  Whenever  the  theory  of  government  inter- 
ference goes  far  enough  to  deny  the  whims  of  a  large  enough  number 
of  people,  it  will  meet  effective  resistance.  Thus  far  it  has  been  easy  to 
draw  some  distinction  between  aggregates  of  " capital,"  generally  typi- 
fied in  the  name  of  some  individual  whom  magazine  writers  have  made 
as  mythical  as  Hercules  or  Theseus,  and  private  property.  No  person 
with  a  spark  of  ambition  or  initiative  wishes  to  deny  himself  the  right 
of  owning  property  and  increasing  it.  The  world  is  not  ruled  by  the 
passive  and  timid  no  matter  how  greatly  they  may  preponderate  in 
numbers;  it  is  ruled  by  the  aspiring  and  energetic.  Now  the  mines  of 
the  country  are  not  owned  by  a  few  rich  and  decadent  beneficiaries 
of  privilege  but  by  a  huge  army  of  stockholders,  investors  great  and 
small,  whose  capital  is,  by  overwhelming  preponderance,  the  fruit  of 
their  own  efforts  and  their  own  virtues;  of  frugality,  industry,  enterprise 
and  ability.  These  people  have  a  decided  interest  in  holding  their  capital 
intact  and  not  having  it  reduced  or  dissipated  by  ignorant,  perhaps 
malicious,  taxation  of  " income."  This  might  in  the  minds  of  theorists, 
whose  number  is  apparently  increasing,  be  a  convenient  way  of  meeting 
the  increased  expenses  of  the  government.  These  expenses  are  to  be 
permanently  increased  not  only  by  the  interest  on  war  debts,  but  by  the 
growth  of  government  bureaus  which  has  been  greatly  stimulated  by 


NATURE  AND  USE  OF  CAPITAL  43 

the  war;  and  by  a  general  expansion  of  the  policy  of  the  government 
which  it  will  be  difficult,  no  doubt,  to  .nullify. 

Capital  is  Present  Value. — What,' then,  is  the  capital  of  mines?  There 
appears  to  be  no  sure  way  of  fixing  capital,  or  of  distinguishing  it  sharply 
from  profits.  Some  may  be  disposed  to  argue  that  capital  is  the  actual 
amount  of  money  invested  in  a  given  project.  This  does  not  seem  to 
fit  the  case  except  momentarily.  When  an  enterprise  is  launched  thej' 
amount  of  money  put  into  it  is,  of  course,  the  amount  upon  which  a| 
return  is  expected,  but  it  is  always  a  mere  accident  if  the  return  is  justl 
equal  to  the  amount  required.  It  is  far  more  likely  to  be  either 
below  or  above  that  amount;  if  below,  a  portion  of  the  investment  is 
lost,  because  the  enterprise  does  not  yield  an  amount  sufficient  to  return 
it  to  the  owners;  if  above,  a  gain  is  made  because  the  yield  is  greater  than 
the  amount  required  to  return  the  investment.  In  one  case  the  capital 
diminishes,  in  the  other  it  increases,  in  neither  case  does  it  remain 
stationary. 

If  an  investment  is  disappointing  no  amount  of  argument  will  restore 
the  capital,  therefore  everyone  must  admit  that  it  involves  a  loss  of 
capital.  If  we  are  to  argue  that  the  capital  in  a  successful  enterprise 
does  not  increase  then  we  shall  have  to  look  forward  to  the  extinction 
of  all  capital,  for  it  is  self-evident  that  if  some  enterprises  lose  capital 
and  none  gain  it,  the  process  of  investment  must  be  one  of  -destruction.  ** 

Again,  what  is  the  amount  invested?  Must  it  be  money  drawn  from 
a  bank  or  can  it  be  some  other  form  of  value?  Take  for  instance  a  mine; 
one  party  contributes  $1,000,000  in  actual  money  for  equipment,  another 
contributes  a  tract  of  land,  on  which  say  $10,000  has  actually  been  spent, 
but  which  nevertheless  is  accepted  by  the  first  party  at  a  valuation  of 
$2,000,000.  That  the  transaction  is  made  in  good  faith  is  proved  by  the 
fact  that  the  party  which  contributes  all  the  money  is  satisfied  with 
only  one-third  of  the  property.  In  this  case,  a  very  frequent  one,  is  the 
amount  invested,  the  $1,010,000  which  we  may  trace  to  actual  money 
transfers  or  is  it  the  $3,000,000  agreed  upon  as  the  basis  of  the  property 
transfer?  My  assumption  is  that  the  investment  is  the  latter  sum. 
I  would  assume  further  that  this  sum  is  the  capital  put  into  the  enter- 
prise at  the  time  the  bargain  is  made,  but  that  it  is  not  necessarily  a 
permanent  measure  of  the  capital  any  more  than  the  $10,000  in  money 
put  into  the  land  was  a  final  value  of  the  value  of  the  land. 

This  train  of  argument  leads  to  the  conclusion  that,  if  we  are  to  admit  , 
the  existence  of  capital  at  all,  we  can  only  describe  it  as  so  much  value. 
We  must  ignore  the  origin  of  that  value  and  devote  our  attention  to  the 
practical  matter  of  how  to  measure  it.  I  believe  this  conclusion  is  one 
which  has  been  upheld  and  will  continue  to  be  upheld  by  the  courts  as 
well  as  by  financiers.  It  seems  utterly  absurd  to  argue  that  capital  can 
be  limited  by  the  mere  process  of  setting  down  certain  figures.  It  is 


44  THE  COST  OF  MINING 

equally  out  of  the  question  to  attach  any  commercial  significance  to  how 
much  capital  could  be  credited  to  an  enterprise  or  to  an  individual  at 
some  past  date.  The  fact  that  a  rich  man  of  today,  was  a  penniless 
boy  fifty  years  ago,  has  no  bearing  whatever  on  the  amount  of  capital 
he  may  own.  Similarly  a  mine  yielding  $1,000,000  a  year  is  surely  an 
asset,  and  that  asset  is  capital,  without  any  regard  to  the  fact  that  it 
may  have  been  started  by  prospectors  by  dint  of  manual  labor  and 
absolutely  without  a  bank  account. 

As  to  the  process  of  establishing  value,  I  have  always  argued  that  it 
must  be  traced  to  commercial  transactions.  We  cannot  attribute  any 
theoretical  value,  for  instance,  to  the  metal  lead.  There  might  be,  per- 
haps, some  theoretical  figures  worked  out  for  it,  based,  let  us  say,  on  its 
relative  abundance  compared  with  other  metals,  or  some  such  considera- 
tions, but  nobody  would  pay  any  attention  to  them.  The  value  of  lead 
is  always  established  by  its  price  in  the  open  market.  The  value  of  a 
lead  mine  must  rest  on  that  price,  and  has  to  be  figured  from  the  amount 
that  can  be  marketed,  the  cost  of  production  and  the  time  required  to 
complete  the  operation.  If  these  additional  factors  (quantity,  cost  and* 
time)  are  involved  in  uncertainty,  as  they  usually  are,  it  is  obvious  that 
the  valuation  of  the  mine  is  a  much  more  intricate  and  less  reliable  matter 
than  that  of  the  metal.  As  a  matter  of  fact  grave  mistakes  are  made. 
Properties  are  often  accepted  by  the  public  at  high  valuations  but  turn 
out  finally  to  be  worthless. 

\  This  is  the  argument  for  not  accepting  stock  market  quotations  for  the 
value  of  mining  companies;  although  we  must  admit  that  in  the  majority 
of  cases  these  quotations  do  give  a  reasonable  approximation  of  the 
values.  But  we  must  remember  that  mines  are  not  staples  like  the 
metals  they  produce  and  that  market  quotations  upon  them  are  of  a 
different  order  from  quotations  on  staples.  Thus  lead  in  a  warehouse  is 
always  marketable.  It  is  as  good  as  any  other  lead.  Its  price  varies 
between  certain  limits,  of  course,  but  the  market  value,  whatever  it  is, 
is  always  there.  But  there  is  no  such  certitude  or  permanence  about  the 
stock  of  the  mine.  Today  it  may  be  in  high  favor;  five  years  from  now 
it  may  be  worth  twice  as  much,  or  nothing  at  all,  and  the  quotations  bear 
no  definite  relation  to  the  price  of  the  metal,  but  are  influenced  strongly, 
often  decisively,  by  other  factors. 

Again,  we  can  never  be  certain  that  the  valuation  of  stocks  by  market 
quotation  represents  thejsame_action  in  all  cases.  Many  properties  are 
not  on  the  market  at  all.  Of  those  actually  before  the  public,  some  may 
be  in  high  esteem,  skillfully  advertised  and  distributed  among  a  large 
number  of  holders;  others  may  be  scarcely  noticed,  with  few  holders, 
few  transfers,  and  the  market  may  be  merely  nominal.  It  is  conceivable 
that  the  highly  advertised  stock  might  bring  twice  the  price  of  the  obscure 
one,  even  though  both  have  the  same  actual  merit. 

I  think  these  considerations  are  generally  conceded  to  be  convincing 


NATURE  AND  USE  OF  CAPITAL  45 

reasons  for  subjecting  the  valuation  of  mines  to  a  searching  and  independ- 
ent review  every  time  such  property  becomes  the  object  of  any  important 
transaction.  I  think  the  government  should  recognize  this  fact  in  its 
dealings  with  mines.  In  former  times  those  dealings  were  from  a  financial 
point  of  view,  of  slight  importance,  but  under  present  conditions  the 
settlement  of  taxes  is  for  prosperous  concerns,  a  transaction  of  the  first 
order.  It  follows  that  it  is  highly  desirable  for  the  government  not  only 
to  permit  but  to  encourage  a  rational  method  of  valuation,  which  can  be 
applied  at  any  time  at  the  instance  of  either  party. 

If  the  purpose  of  a  government  is  not  to  promote  fair  play  among  its 
citizens,  then  it  must  be  prepared  to  exercise  its  forces  regardless  of  fair 
play.  This  does  not  sound  well,  for  the  next  inference  is  that  if  the 
organized  powers  of  the  government  are  not  necessarily  to  be  Used  to 
secure  justice,  they  may  be  used  for  oppression.  An  attitude  of  this 
kind,  therefore,  on  the  part  of  the  government,  is  one  tenable  only  as 
an  excuse  for  a  temporary  jconfusion,  and  not  as  a  real  policy.  It 
follows  as  a  practical  conclusion  that  the  government  must  adopt  a 
logical  and  equitable  theory  of  distinguishing  capital  from  profit. 

My  conception  of  such  a  theory  may  be  summarized  as  follows: 

1.  The  capital  is  the  present  value  that  could  be  realized  from  the 
liquidation  of  an  enterprise,  through  normal  commercial  transactions. 

2.  Profit  is  a  fair  interest  upon  the  capital. 

3.  In  the  case  of  a  property  like  a  mine,  in  which  a  profit  can  be  made 
only  by  using  up  its  physical  resources,  income  is  never  wholly  profit.. 
In  the  case  of  an  unprofitable  enterprise,  the  income  is  merely  a  partial 
return  of  money  actually  invested.     In  the  case  of  a  profitable  enterprise 
it  is  partly  capital  and  partly  a  return  on  that  capital. 

When  such  a  property  is  short-lived  the  proportion  of  capital  required 
each  year  is  large.  As  the  length  of  life  increases,  the  annual  installment 
of  capital  diminishes — thus  a  property  which  is  to  be  liquidated  in  three 
annual  installments  requires  an  annual  return  of  capital  equal  to  more 
than  31  per  cent,  of  the  total  value,  while  one  that  is  to  be  liquidated  in 
thirty  annual  installments  requires  a  return  of  only  2  per  cent.  Let  us 
suppose  that  in  each  case,  the  income  is  $1000,  and  that  in  each  case  the 
interest  rate  is  5  per  cent.  In  the  three  year  property  the  present  value 
is  approximately  $2790;  the  annual  income  is  $930  principal  and  $70 
interest  or  profit.  In  the  case  of  the  thirty  year  property  the  present 
value  is  $15,000,  and  the  income  is  $250  principal  and  $750  profit.  In 
the  first  case  the  capital  return  required  is  93  per  cent,  of  the  total  income, 
in  the  second  only  25  per  cent.  (These  figures  are  only  approximate 
but  they  illustrate  the  point.) 

From  this  it  is  clear  that  as  a  matter  of  calculating  income  tax  the 
question  of  the  proportion  of  profit  is  more  a  question  of  expected  life 
than  of  anything  else.  When  the  life  is  unlimited  the  capital  installment 
is  zero  and  all  income  is  profit. 


CHAPTER  IV 

FACTORS  GOVERNING  VARIATIONS  OF  COST 

WHAT  THE  COST  CONSISTS  OF — FACTORS  DIVIDED  INTO  EXTERNAL  AND  INTERNAL  GROUPS 
— EXTERNAL  FACTORS:  LABOR  SUPPLIES,  CLIMATE,  TRANSPORTATION,  WATER — 
INTERNAL  FACTORS:  OREBODIES,  ATTITUDE,  CONCENTRATING  QUALITIES,  SMELTING 
QUALITIES — MINING  AND  METALLURGICAL  LOSSES  AND  THEIR  EFFECTS  UPON  COSTS 
— ELEMENTS  OF  A  COMPLETE  COST  STATEMENT — CHARACTER  OF  ACTUAL  REPORTS 
— MANAGEMENT — How  RICH  MINES  ARE  MORE  COSTLY  TO  OPERATE  THAN  LOW- 
GRADE  MINES — HOOVER'S  THEOREM  ON  THE  RATIO  OF  TREATMENT  CAPACITY  TO 

ORE    RESERVES ECONOMY    AND    SPEED — PRIVATE    MANAGEMENT    AND    PUBLIC 

INTEREST. 

IT  is  necessary  first  to  define  what  we  mean  by  the  cost  of  mining. 
It  may  be  divided  into  three  parts : 

(A)  The  use  of  capital  in  acquiring  the  opportunity  to  mine,  i.e., 
ownership  of  ground,  or  leases.     Since  the  value  of  this  kind  of  property 
is  only  a  speculative  anticipation  of  profits  to  be  won  by  operating,  and 
is  moreover  often  appraised  in  a  fanciful  or  even  dishonest  way,  I  prefer 
to  leave  this  element  out  of  the  discussion.     I  am  quite  aware,  however, 
that  as  a  matter  of  practical  finance  this  cost  must  generally  be  considered. 

(B)  The  use  of  capital  for  equipping  and  developing  a  mine,  for  pro- 
viding mills  and  smelters. 

(C)  Current  operating   costs,  including  taxes,   the   maintenance  of 
company  organization,  insurance,  litigation,  etc. 

For  present  purposes  I  select  B  and  C  and  my  definition  is:  The 
complete  cost  of  developing,  equipping,  and  working  out  a  mine,  allowing 
interest  on  the  capital  required  for  these  purposes  until  it  is  returned  in 
dividends. 

As  any  one  with  the  most  meager  acquaintance  with  the  subject  must 
know,  the  cost  of  mining  at  different  places  is  subject  to  great  variations. 
I  am  not  sure  that  the  factors  governing  these  variations  have  been  fully 
stated. 

A  general  division  may  be  made  between  factors  that  are  external  or 
fortuitous  and  those  introduced  by  the  internal  make  up  of  the  orebodies. 
It  is  evident  that  no  quality  in  the  deposit  itself  can  influence  any  of  the 
following  groups  of  conditions : 

(1)  The  cost  and  quality  of  labor  and  supplies. 

(2)  The  climate,  altitude,  or  distance  from  populous  centers.     • 

(3)  The  hardness  of  surrounding  jocks,  the  amount  of  water,  the 
depth  from  surface. 

46 


FACTORS  GOVERNING  VARIATIONS  OF  COST  47 

(4)  The  facilities  and  cost  of  transportation  to  milling  or  smelting 
centers  or  markets. 

All  of  the  above  conditions  vary  from  place  to  place  and  introduce 
differences  in  the  cost  of  mining,  though  not  such  great  differences  (as 
will  be  shown  later)^ajij(^a\  caused  by  the  inherent  qualities  of  the  orebodies 
themselves. 

Cost  of  Labor  and  Supplies. — The  wages  in  the  mines  of  the  United 
States  varied  in  1908  between  20  and  60  cents  an  hour,  now  perhaps 
between  $0.40  and  $1.20  per  hour.  Usually  the  difference  is  partly  made 
up  by  the  varying  efficiency  of  the  men.  Where  wages  are  low  the 
supply  of  labor  is  meager,  the  best  men  are  constantly  leaving  for  more 
favorable  localities^ those  employed  are  not  subject  to  the  spur  of  keen 
competition,  and  the  results  are  constantly  disappointing.  On  the 
other  hand,  where  wages  are  high,  the  most  ambitions  and  intelligent 
men  are  attracted  and  they  compete  with  each  other  for  the  places. 

It  is  hard  to  fix  any  figure  for  the  compensation  thus  effected,  but  it 
would  perhaps  be  safe  to  say  that  one-half  of  the  apparent  difference  is 
made  up.  Some  authorities  will  say  it  is  nearly  all  made  up.  Messrs. 
Taylor  &  Brunton  tell  me  that  in  operating  sampling  mills  at  Cripple 
Creek  Colo.,  where  the  wages  are  40  cents  an  hour,  and  at  Salt  Lake  City, 
where  the  wages  are  25  cents  an  hour,  there  is  but  little  difference  in  the 
labor  cost  per  ton  sampled.  If  we  assume  that  while  the  difference  in 
wages  is  represented  by  20  and  60  and  the-  difference  in  cost  efficiency  by 
40  and  60  (or  70  and  100),  we  find  that  the  variation  in  labor  cost  is  only 
about  30  per  cent,  from  the  maximum.  Since  the  labor  accounts  generally 
are  about  60  per  cent. of  the  total  current  cost  of  mining,  differences  in 
wages  are  not  likely  to  account  for  a  variation  of  more  than  18  per  cent.1 

In  the  world  at  large,  outside  of  the  United  States,  there  may  be  in- 
stances where  the  differences  in  wages  are  more  important^than  within 
the  United  States.  Nevertheless,  in  the  few  important  mining  districts 

1  The  experience  of  the  war  period  has  demonstrated  a  modification  of  this  general- 
ization. It  would  be  better  stated  that  high  wages  do  not  cause  high  costs  under 
competitive  labor  conditions.  When  the  demand  for  labor  exceeds  the  supply  workmen 
are  merely  tempted  to  change  from  one  industry  into  another  with  which  they  are 
not  familiar  and  in  which  their  efficiency  is  at  first  necessarily  less.  The  depletion  of 
.the  labor  in  the  first  industry  soon  causes  an  effort  to  tempt  men  back  again  at  still 
higher  wages.  Finally  large  groups  of  men  become  careless  of  their  jobs,  the  more  so, 
perhaps,  the  higher  the  pay,  certainly  in  some  proportion  to  the  ease  with  which  a 
new  job  may  be  obtained.  They  will  frequently  change  about  for  trivial  reasons  such 
as  curiosity  to  try  something  new,  desire  to  see  the  country  or  to  show  their  independ- 
ence. As  the  numbers  of  such  a  group -increases  their  example  becomes  fashionable 
and  demoralizes  the  standards  of  more  conservative  men.  Without  any  concerted 
plan  therefore  efficiency  diminishes,  production  diminishes;  the  demand  for  output  is 
further  than  ever  from  being  satisfied,  the  economic  unbalance  is  intensified  and  costs 
increase  without  ascertainable  limit. 


48  THE  COST  OF  MINING 

of  which  I  have  any  knowledge,  such  as  the  Transvaal,  India,  and  Mexi- 
co, where  native  labor  is  employed  very  largely  at  very  low  rates,  it  is 
well  known  that  the  costs  are  not  lower  than  in  the  United  States  for  simi- 
lar work.  It  appears  that  where  labor  is  very  low  there  is  little  or  no 
acquaintance  with  machinery  and  the  performance  per  man  is  corre- 
spondingly low.  Where  large  numbers  of  natives,  ignorant  of  all  civilized 
mechanical  appliances,  are  employed  at  a  large  plant,  they  must  be  super- 
vised by  white  men  who  do  little  actual  work  and  get  wages  higher  than 
those  they  receive  at  home. 

In  the  English-speaking  countries  where  mining  is  an  important  in- 
dustry, it  may  be  said  that  the  conditions  as  regards  labor  are  almost 
identical  with  those  of  the  United  States.  It  does  not  appear  probable 
therefore,  that  my  conclusions  regarding  the  variations  caused  by  wages 
in  the  United  States  need  to  be  essentially  changed  when  applied  to  the 
important  producing  centers  of  the  world  at  large.  Extreme  variations 
must  be  confined  largely  to  isolated  and  abnormal  localities. 

The  cost  of  supplies  affects  the  cost  directly.  The  important  supplies 
are  fuel,  timber,  explosives,  steel,  and  tools.  In  the  United  States  the 
price  of  these  commodities  does  not  vary  enormously  among  the  important 
mining  centers,  certainly  not  much  more  than  50  per  cent,  from  the  maxi- 
mum. Since  the  collective  cost  of  the  various  supplies  is  rarely  more  than 
20  per  cent,  of  the  total  current  mining  cost,  a  variation  of  50  per  cent, 
in  the  price  will  produce  a  difference  of  only  10  per  cent,  in  that  cost. 

The  cost  of  supplies  in  the  world  at  large  is  apparently  subject  to 
about  the  same  degree  of  difference  as  the  cost  of  labor,  but  it  is  to  be 
remarked  that  in  any  country,  such  as  India  and  South  Africa,  where  the 
price  of  labor  is  nominally  low,  the  cost  of  supplies  is  usually  distinctly 
higher  than  in  the  United  States.  In  the  Transvaal  for  instance,  Ross 
E.  Browne  estimates  that  the  additional  cost  of  supplies  as  compared 
with  California  accounts  for  approximately  10  per  cent,  of  the  total 
cost  of  mining. 

Underground  Conditions. — The  hardness  of  the  rock  is  likewise  a 
comparatively  unimportant  factor.  In  any  case  the  hardness  affects  only 
one  division  of  the  underground  work;  namely,  breaking  the  ground. 
The  stability  of  the  ground  is  much  more  important  than  the  hardness. 
Timbering  is  often  an  important  item. 

Increase  in  depth  adds  something  to  the  cost  of  hoisting  and  pump- 
ing, but  it  is  to  be  remembered  in  this  connection  that  if  a  mine  is  only 
100  ft.  deep,  machinery  must  be  provided  for  these  purposes  and  a  com- 
plement of  men  employed  to  operate  it.  As  depth  increases,  the  only 
change  that  comes  in  is  the  requirement  of  heavier  machinery  and  addi- 
tional power.  The  increase  of  cost,  therefore,  is  far  from  being  propor- 
tional to  the  depth.  One  consequence  of  extreme  depth  that  might 
easily  be  overlooked  is  the  daily  cost  of  transporting  the  men  to  and 


FACTORS  GOVERNING  VARIATIONS  OF  COST  49 

from  their  working  places.  In  the  case  of  the  Calumet  &  Hecla,  the 
hoisting  engines  are  in  use  two  hours  each  shift  in  lowering  the  men  and 
hoisting  them  out  again.  Not  only  does  this  represent  a  considerable 
expense  in  itself  for  mere  hoisting,  but  the  greater  part  of  the  time  of  the 
workmen  for  this  period  is  lost  to  the  company. 

The  temperature  of  underground  workings  often  becomes  a  matter 
of  considerable  importance.  A  high  temperature  may  be  caused  by  the 
climate,  or  by  great  depth,  or  by  the  presence  of  hot  waters  or  heat- 
producing  chemicals.  It  is  only  in  the  last  case  that  the  heat  can  be 
called  an  inherent  quality  of  the  orebody  itself.  There  have  been  cases 
of  such  high  temperatures  in  mines  as  almost  to  prevent  working  alto- 
gether, but  ordinarily  temperatures  of  80  or  90°F.  are  about  the  limit 
reached  in  important  mines.  Such  temperatures  affect  the  energies  of 
the  men  adversely,  although  men  grow  accustomed  to  them  and  suffer 
no  ill  consequences  in  the  way  of  health.  The  importance  of  this  factor 
is  extremely  difficult  to  appraise  in  figures,  although  in  the  case  of  the 
Calumet  &  Hecla,  Anaconda,  and  United  Verde,  to  cite  conspicuous 
examples,  the  loss  of  effectiveness  in  labor  through  this  cause  must  repre- 
sent annually  a  very  large  sum. 

These  remarks  are  intended  to  apply  only  to  underground  mines. 
Where  the  work  is  done  wholly  upon  the  surface,  the  facilities  for  working 
are  so  much  superior  that  mines  of  this  character  must  be  considered 
separately. 

Climate,  Altitude,  and  Population. — The  influence  of  climate,  though 
indirect,  is  powerul  through  its  effect  on  human  life  and  effort.  Some- 
times in  places  where  there  is  an  excessive  rainfall  or  excessive  heat  or 
unhealthful  conditions,  the  effect  may  be  to  limit  the  scope  of  operations. 
For  instance,  in  Ecuador,  South  America,  a  plant  has  been  running  35 
years,  but  on  account  of  the  climatic  influences  it  was  for  30  of  those 
years  impossible  to  secure  more  than  about  60  effective  miners,  although 
the  economical  management  of  the  property  required  the  employment  of 
several  times  as  many. 

Excessive  altitude,  and  great  distance  from  lines  of  transportation, 
place  similar  limitations  upon  enterprise.  Where  several  factors  of  this 
kind  are  present  at  the  same  locality,  the  aggregate  effect  is  to  place  al- 
most unsurmountable  difficulties  in  the  way  of  successful  operations,  but 
as  a  general  rule  in  places  where  important  mines  have  been  discovered, 
most  of  these  difficulties  have  been  overcome.  For  instance,  in  the  San 
Juan  region  of  Colorado,  and  in  the  Cerro  de  Pasco  in  Peru  adequate 
transportation  facilities  have  been  provided  and  the  only  adverse  condi- 
tions still  remaining  are  the  altitude  and  disagreeable  climate  which  have 
in  both  instances  a  pronounced  ill  effect  upon  the  performance  of  the  labor. 
J  Transportation  and  Marketing  the  Product. — Transportation  facili- 
ties may  be  described  as  adequate  when  they  are  sufficient  to  handle  the 


50  THE  COST  OF  MINING 

output  of  a  mine  and  to  deliver  with  promptness  the  necessary  supplies; 
but  adequacy  in  this  sense  does  not  mean  cheapness.  Transportation  is 
in  very  many  cases  one  of  the  most  vital  elements  in  the  cost  of  mining. 
This  is  particularly  the  case  when  the  products  have  to  be  shipped  consid- 
erable distances.  In  the  case  of  coal  and  iron  it  is  a  matter  of  common 
knowledge  that  transportation  is  often  the  all  important  factor,  and 
even  in  the  case  of  precious  metals  sometimes  the  cost  of  transportation 
to  mills  and  smelters  equals,  if  it  does  not  exceed,  the  cost  of  actual  min- 
ing. The  intimate  bearing  of  this  fact  upon  mining  methods  and  results 
aside  from  the  mere  question  of  transportation  cost  in  themselves  will 
be  described  later  on. 

Another  factor  that  is  often  of  considerable  importance  is  the  commer- 
cial matter  of  marketing  the  products.  This  is  sometimes  done  by  con- 
tracts with  selling  agencies;  and  sometimes  by  the  company  itself.  In 
either  case  there  is  to  be  taken  into  consideration,  in  addition  to  the  cost 
of  marketing,  the  success  achieved  in  disposing  of  satisfactory  quantities 
of  the  product.  It  is  in  this  respect  particularly  that  the  cost  of  mining 
may  be  greatly  influenced  by  this  factor  in  determining  the  volume  of 
operations. 

Coincidence  of  External  Factors. — One  would  scarcely  expect  that 
these  various  factors  would  move  in  unison,  i.e.,  that  they  should  all 
be  equally  bad  in  one  place  and  equally  good  in  another.  So  far  as  the 
natural  conditions  such  as  rock  hardness,  depth,  and  amount  of  water 
to  be  pumped  are  concerned,  it  is  indeed  extremely  unusual  that  such 
factors  are  at  a  given  place  at  either  extreme;  but  it  must  not  be  forgotten 
that  the  remaining  external  factors  have  their  effect  through  the  efforts 
of  man  himself.  If  the  mine  is  situated  far  from  populous  centers  the 
reason  is  apt  to  be  that  the  climate  or  the  altitude  is  unfavorable. 
This  generally  means  that  labor  is  dear  and  inefficient,  supplies  costly, 
transportation  difficult  and  expensive.  These  factors  are  likely,  therefore, 
to  be  affected  together,  and  if  one  is  favorable  they  are  all  likely  to  be 
favorable  and  vice  versa. 

The  sum  total  of  cost  variations  that  may  be  due  to  the  coincidence 
of  these  external  factors  is  therefore  considerable  and  is  sufficient  to  pre- 
vent the  working  of  abundant  yet  valuable  products  such  as  coal,  iron 
ore,  or  salt  at  places  where  these  conditions  are  all  bad.  It  may  be  said 
that  the  above  factors  are  those  which  as  a  rule  govern  the  variations  in 
the  cost  of  low-priced  and  bulky  mineral  products. 

Internal  Factors. — The  internal  factors  are:  (1)  The  size  and  attitude 
of  the  orebodies;  (2)  the  relation  the  valuable  material  bears  to  the  en- 
closing gangue  or  material;  (3)  the  problems  involved  in  metallurgical 
treatment. 

These  factors  introduce  immense  differences  of  cost.  For  instance,  in 
gold  mining  we  find  that  the  Alaska-Treadwell  has  mined,  treated,  and  mar- 


FACTORS  GOVERNING  VARIATIONS  OF  COST         51 

keted  its  ore  for  $1.48  per  ton,  while  the  Camp  Bird  in  Colorado  producing 
gold  ore  subjected  to  the  same  process  costs  $12.50  per  ton.  The  wages 
are  the  same,  the  rock  is  of  the  same  hardness,  the  water  is  no  problem  in 
either  case,  the  method  of  mining  even  is  practically  the  same.  The 
general  management  of  the  Treadwell  is  probably  more  economical  than 
that  of  the  Camp  Bird,  but  the  difference  is  not  to  be  laid  to  this  score. 
The  difference  comes  in  the  factors  mentioned  above  and  those  factors 
are  so  important  that  they  are  worth  a  more  extended  consideration. 

If  we  have  a  body  of  homogeneous  material  more  than  four  feet  thick 
and  continuous,  it  is  evident  that  the  mine  openings  can  be  made  very 
largely,  if  not  wholly,  in  the  stuff  to  be  extracted.  ^Practically  every 
blow  struck  produces  ore.  But  reduce  the  thickness  to  be  mined  to  one 
foot  and  we  are  at  once  confronted  with  the  necessity  of  taking  out  three 
feet  of  worthless  material  for  one  foot  that  is  valuable,  besides  having  to 
take  pains  to  keep  them  separate.  Here  we  introduce  at  once  an  enor- 
mous proportion  of  wasted  expense  that  must  be  borne  by  the  valuable 
ore.  Now  break  the  continuity  of  the  deposit  and  it  is  evident  that  open- 
ings have  to  be  made  entirely  through  waste  material  merely  to  find  and 
open  up  the  scattered  bodies.  This  evidently  increases  the  cost  still  more. 
Now,  since  it  costs  about  as  much  to  handle  one  kind  of  rock  as  another, 
it  is  very  evident  that  the  cost  of  handling  narrow  and  non-continuous 
orebodies  may  be  many  times  greater  than  the  cost  of  mining  orebodies 
large  enough  to  afford  room  to  work  in.  A  sort  of  dead  line  is  estab- 
lished by  a  thickness  of  approximately  four  feet.  Orebodies  thicker  than 
four  feet  are  only  moderately  cheaper  to  handle  than  those  of  about  that 
thickness. 

The  attitude  of  an  orebody  has  a  great  deal  to  do  with  the  cost  of 
extracting  it.  For  instance,  in  the  anthracite  coal-fields,  in  Pennsylvania, 
and  in  various  other  coal-fields,  the  beds  are  thrown  into  a  succession  of 
folds  with  constantly  varying  slopes.  The  effect  of  this  is  double.  First 
it  renders  more  difficult  the  taking  of  the  material  from  the  working 
places  to  the  haulage  roads,  and  secondly  it  renders  necessary  a  large 
amount  of  dead  work  in  order  to  reach  the  various  parts  of  the  beds  and 
also  prevents  regular  systematic  working.  These  two  factors  are 
sufficient  to  introduce  a  great  increase  of  cost  over  that  of  mining  a  flat 
and  unbroken  seam.1 

1  The  importance  of  this  factor  is  not  sufficiently  emphasized  in  the  text.  In  a  flat 
deposit  work  may  be  conducted  permanently  on  one  level.  The  shaft,  once  sunk,  is 
completed  and  requires  no  further  attention;  the  pumping  and  hoisting  equipment 
are  not  complicated  by  any  necessity  of  adapting  them  to  a  changing  base,  i.e.,  remov- 
ing pumps  from  one  level  to  another  and  getting  more  powerful  and  larger  hoisting 
engines  to  provide  for  increasing  depth.  Still  more  important  is  the  comparative 
absence  of  deadwork,  of  the  constant  extension  of  horizontal  openings  on  new  levels, 
of  the  awkwardness  and  effort  required  to  hoist  materials,  timbers  and  men  up  ver- 
tical or  inclined  slopes,  and  of  the  work  of  building  chutes  or  other  appliances  for 


52  THE  COST  OF  MINING 

Homogeneity  of  Ore. — The  homogeneity  of  the  ore  is  a  factor  of  great 
importance.  This  quality  determines  whether  it  is  necessary  to  sub- 
ject to  metallurgical  treatment  the  whole  or  only  a  part  of  an  orebody. 
If  only  a  part  need  to  so  treated  we  have  a  concentrating  ore.  The  man- 
ner in  which  the  valuable  mineral  lies  in  the  enclosing  rock  determines 
how  the  concentrating  must  be  done.  In  any  case  the  process  of  concen- 
tration involves  loss  and  expense,  and  the  question  of  how  far  this  loss 
and  expense  is  justified  depends  on  the  cost  and  character  of  the  subse- 
quent metallurgical  treatment. 

The  cost  of  the  metallurgical  treatment  depends  primarily  on  the 
proportion  of  ore  that  must  be  treated.  This  proportion  varies  at  dif- 
ferent mines  from  2  to  100  per  cent.  Obviously,  where  only  2  per  cent, 
must  be  treated  the  cost  of  treatment  as  applied  to  the  whole  orebody 
will  be  less  than  where  all  is  treated.  The  inherent  metallurgical  prob- 
lem is  therefore  only  reached  when  the  question  of  selection  is  settled. 

Low  Costs  in  Mining  May  Mean  Greater  Expense  Elsewhere. — The 
above  seems  a  sufficient  explanation  of  the  fact  that  it  is  necessary  to  a 
discussion  of  mining  to  include  a  consideration  of  the  processes  by  which 
the  ore  is  to  be  treated.  It  is  not  possible  to  run  a  mine  intelligently  with- 
out achieving  whatever  economy  there  may  be  in  dressing  the  ore  so 
that  the  further  handling  will  be  facilitated.  Efforts  to  make  "  records  " 
of  low  costs  per  ton  have  in  many  cases  actually  resulted  in  good  mines 
being  run  at  a  loss.  In  this  connection  I  can  no  better  than  repeat  some 
remarks  from  an  article  published  in  the  Engineering  and  Mining  Jour- 
nal some  years  ago  on  " Mining  Costs  at  Cripple  Creek." 

"Let  us  take  as  a  practical  example  a  body  of  10,000  tons  of  ore,  running  1  oz. 
gold  per  ton.  This  ore  can  be  shipped  without  sorting  at  a  handsome  profit, 
as  follows: 

Gross  value  of  ore $200,000 


Cost  of  mining  10,000  tons  at  $3  per  ton $  30,000 

Freight  and  treatment,  $8.25 82,500 


Total  cost $112,500 


Profit $  87,500 

transferring  ore  or  rock  to  a  haulage  line.  The  cost  of  mining  a  vertical  or  inclined 
deposit  may  be  two  or  three  times  as  great  as  it  would  be  to  mine  the  same  deposit  if 
it  were  flat.  It  appears  that  the  least  favorable  inclination  is  one  of  from  15  to  25 
degrees,  such  that  the  rock  will  not  slide  down,  but  yet  the  steepness  prevents  ordi- 
nary tramming. 

.  Faulting  of  the  beds  or  veins  and  the  occurrence  of  barren  patches  introduce 
complications  similar  to  those  caused  by  folding,  but  very  much  more  variable  in  their 
nature.  The  folding  of  the  formation  is  invariably  regional  and  is  felt  rather  uni- 
formly by  all  of  the  mines  in  a  given  district,  while  a  series  of  faults  may  affect  only 
one  mine  in  a  group  and  while  that  mine  may  have  just  as  good  ore  and  as  much  of  it 
as  its  neighbors  its  costs  will  be  higher. 


FACTORS  GOVERNING  VARIATIONS  OF  COST         53 

"But  suppose  we  reject  half  of  this  ore  by  sorting.  By  so  doing  we  throw 
away  5,000  tons  that  will  average  $2.50  per  ton,  or  $12,500.  The  cost  of  sorting, 
at  50  cents  per  ton,  will  be  $2,500  more.  Then  our  shipment  will  be  as  follows: 


re.     inen  our  snipi 
C^° 

•  •  .  .  -x.  1* 


5,000  tons,  at  $37.50  per  ton. . .  .x.C.r.  .    $187,500 


Cost  of  mining  and  sorting,  $$.50  per  ton $  32,500 

Freight  and  treatment,  $11.25 $  56,250 


Total  cost $  88,750 


Profit $  98,750 

"In  other  words,  the  gross  receipts  in  this  case  have  fallen  $12,500.  The  cost 
of  mining  per  ton  is  more  than  twice  as  great;  the  cost  for  freight  and  treatment 
per  ton  is  $3  greater.  The  apparent  showing  by  the  superintendent  is  very  bad; 
but  nevertheless  he  has  made  for  the  company  $11,250  clear  profit  on  the  trans- 
action. 

"In  the  first  case  our  total  cost  for  mining,  freight,  and  treatment  is  only 
$11.25  per  ton;  in  the  second  case  it  is  $17.75  per  ton,  but  there  is  more  money  in 
the  higher  cost.  This  is  an  example  that  has  been  worked  out  in  practice." 

A  false  economy  often  results  also  from  mining  too  much  in  a  mere 
attempt  to  produce  a  greater  output  than  the  development  of  the  mine 
really  warrants.  This  invariably  results  in  mining  waste  at  a  dead  loss, 
but  as  this  loss  is  on  the  same  basis  as  the  above,  there  seems  no  need 
to  follow  the  discussion  further. 

Effect  of  Losses  in  Determining  Costs. — Mining,  milling,  and  smelting 
losses  often  foot  up  to  a  total  that  is  simply  alarming.  Now  since  it  is 
almost  self-evident  that  crude  methods  involving  high  losses  may  be 
cheap  as  regards  operating  costs,  there  is  always  likely  to  be  a  question 
whether  there  is  any  economy  in  low  costs  obtained  at  the  expense 
of  undue  waste,  or  whether,  on  the  other  hand,  high  efficiency  of  methods 
may  not  be  at  the  expense  of  excessive  cost.  I  think  it  has  seldom  been 
considered  that  there  are  such  substantial  losses  in  each  department 
of  the  business.  If  we  hear  a  discussion  of  mill  losses  in  a  given  district 
it  is  to  be  noticed  that  the  question  of  mine  losses  is  apt  to  be  ignored  ; 
if  attention  is  called  to  mine  losses  there  is  apt  to  be  silence  on  the  subject 
of  smelting  losses.  It  seems  desirable,  therefore,  to  draw  attention  to 
some  of  the  salient  facts  in  regard  to  losses. 

There  never  was  a  mine  from  which  all  the  available  ore  was  extracted. 
The  ore  is  exposed  to  wastage  from  a  variety  of  causes.  If  the  orebody 
is  large,  soft,  and  homogeneous,  as  in  the  Lake  Superior  iron  mines,  ore 
is  lost  through  absolute  failure  to  mine  it.  Some  is  forgotten  until  the 
openings  to  it  are  caved  and  lost.  Some  ore  is  constantly  being  mixed 
with  sand  or  rock  and  left  because  its  grade  has  been  lowered.  Some  is 
surrounded  by  the  caving  of  the  overburden  into  the  mine  openings 
in  such  a  manner  as  to  be  irrecoverable.  System,  care,  and  expense 


54  THE  COST  OF  MINING 

will  do  much  to  diminish  these  losses.  It  may  happen  that  beyond  a 
certain  point  the  cost  of  perfecting  the  extraction  may  increase  very 
rapidly,  may  indeed  necessitate  a  different  and  more  costly  method  of 
mining. 

Since  mines  are  worked  for  the  profit  and  not  for  the  gross  value  of 
their  output  it  may  be  more  economical  to  choose  a  cheap  method  in 
which  the  waste  of  ore  may  be  great.  For  instance,  suppose  an  ore 
worth  $2  a  ton  can  be  mined  with  a  90  per  cent,  extraction  for  $1.25  a  ton, 
but  that  by  another  method  at  a  75  per  cent,  extraction,  it  can  be  mined 
for  90  cents  a  ton.  One  hundred  tons  of  ore  in  the  ground  would  in  the 
two  cases  yield  the  following  results : 
•ORE  WORTH  $2  PER  TON 

Tons          Cost  Velue  Profit 

First  case 90     $112.50     $180.00     $67.60 

Second  case 75         67.50     $150.00       82.  50=  $15  gain. 

ORE  WORTH  $5  PER  TON 

Tons         Cost  Value  Profit 

First  case 90     $112.50     $450.00     $337.50 

Second  case 75       67 .  50         375 . 00       307 . 50       $30  loss. 

It  is  evident,  therefore,  that  even  in  the  most  homogeneous  materials 
the  cost  of  mining  is  directly  affected  by  the  value  of  the  product. 

The  proportion  of  the  deposit  that  may  be  sacrificed  to  obtain  lower 
costs  increases  as  the  margin  of  profit  diminishes.  When  that  margin 
becomes  zero,  obviously  its  value  is  zero  and  the  whole  deposit  being  un- 
workable is  left  in  the  ground. 

Other  Causes  of  Loss. — In  flat  deposits  in  hard  rock  it  is  nearly  always 
necessary  to  leave  some  ore  in  pillars.  Where  the  deposits  are  steeply 
inclined  some  ore  is  usually  left  in  pillars  unless  the  body  is  exceedingly 
small.  In  the  case  of  very  large  bodies  of  low-grade  ore,  like  the  Alaska- 
Treadwell,  large  amounts  are  left  in  this  manner,  not  only  to  insure  the 
safety  of  the  mine  but  also  to  insure  cheapness  of  working.  In  every 
case  where  pillars  are  left  there  is  a  likelihood  of  portions  being  ultimately 
lost. 

Where  ores  are  sorted,  i.e.,  where  they  are  not  homogeneous,  some 
good  material  is  always  rejected  through  ignorance  or  carelessness. 
Where  filling  is  introduced  into  a  stope  there  is  invariably  a  certain 
amount  of  good  ore  that  falls  in  with  it  and  is  lost.  Where  low-grade 
ores  are  sorted  out  and  stowed  underground  because  they  cannot  be 
shipped  and  treated  except  at  a  loss  there  is  a  great  loss  of  metallic 
value,  but  since  it  cannot  be  said  that  such  material  is  payable  irt  cannot 
under  present  conditions  be  called  a  loss. 

These  mining  losses  are,  I  believe,  seldom  measured.  More  or  less 
accurate  guesses  are  made  by  the  engineers  on  the  ground,  but  the  losses 
in  mining  are  almost  never  seriously  reported.  In  a  general  way  we  may 
place  mining  losses  at  from  5  to  30  per  cent,  of  the  developed  ore. 


FACTORS  GOVERNING  VARIATIONS  OF  COST 


55 


Losses  in  Milling  and  Smelting. — Milling  losses  are  in  some  localities 
painfully  and  accurately  studied;  in  other  places  they  are  casually 
guessed  at  or  ignored.  It  is  usually  fashionable  to  guess  the  extraction 
at  80  to  90  per  cent,  for  concentrating  and  at  about  95  per  cent,  for 
cyaniding  or  chlorinating.  Sometimes,  as  a  matter  of  fact,  losses  in 
concentration  amount  to  40  per  cent,  or  even  more.  When  the  milling 
is  not  systematically  and  accurately  checked  the  losses  as  a  rule  are  much 
higher  than  the  owners  imagine.  Little  definite  information  is  to  be  had. 

Smelting  losses  are  probably  determined  much  more  accurately 
than  either  mining  or  milling  losses,  but  they  are  almost  never  mentioned 
in  reports  to  stockholders.  In  this  department  of  the  business  it  is 
necessary  to  take  more  or  less  general  statements  of  metallurgists. 

The  importance  and  economic  bearing  of  the  losses  sustained  in 
some  representative  districts  are  shown  in  an  accompanying  table. 
Much  care  must  be  exercised  in  the  interpretation  of  these  figures  for 
economic  purposes.  The  values  thrown  away  are  theoretical  values. 
The  practical  limit  of  extraction  invariably  falls  short  of  100  per  cent. 
The  real  purpose  of  the  table  is  to  show  in  current  practice  the  debatable 
ground  in  which  the  curtailment  of  losses  is  confronted  by  a  rising  scale 
of  costs. 

PROPORTIONATE  RECOVERY  AND  LOSSES  IN  100  TONS  OF  ORE  IN  SOME  IMPORTANT 

MINING  DISTRICTS 


Pittsburg  coal 

Lake 
Superior 
iron 

S.  E. 
Missouri 
lead 

S.  W. 
Missouri 
zinc 

_o 

08 

Cripple 
Creek 
gold 

Gross  value  in  the  ground 

$110 

88 

$800 
$600  to    760 

550  to    744 

$460 
400 
$300  to  $340 
270  to    332 

$500 
$375  to    475 
187  to    300 
163  to    260 

$280 
246 
186 
180 

$100 
64 

$1000 
$850  to  $950 
782  to    912 
840  to    940 

Gross  value  recovered  by  mining  
Gross  value  recovered  by  milling  
Gross  value  recovered  by  smelting.  .  .  . 

Gross  aggregate  losses  
Per  cent,  recovered  

$22 
80 

$56  to  $250 
70  to  93 

$128  to  $190 
58  to  72 

$240  to  $337 
33  to  52 

$60  to  $160 
78  to  94 

The  aggregate  losses  represent  the  maximum  of  additional  operating  expense  theoretically  justi- 
fiable by  the  extinguishment  of  losses. 

It  has  been  shown  in  the  case  of  Cripple  Creek  ores  how  a  mining 
cost  may  be  too  low,  and  it  may  be  shown  in  the  same  way  that  milling 
and  smelting  costs  may  be  too  low.  As  a  matter  of  fact  they  are  very 
apt  to  be  too  low;  rather  more  often  too  low  than  too  high.  Neverthe- 
less it  is  perhaps  well  to  point  out  that  the  economical  cost  is  always  a 
function  of  the  value  of  the  product.  Of  the  various  products  of  mines 
gold  is  the  only  one  whose  value  is  fixed.  Where  the  product  is  variable 
in  price  the  proportion  of  the  losses  is  constantly  changing,  and  the 
amount  of  expense  warranted  by  the  pursuit  of  such  losses  also  varies. 


56  THE  COST  OF  MINING 

Since  the  operation  of  a  mine,  mill,  or  smelter  is  usually  a  thing  that  does 
not  lend  itself  to  a  ready  adjustment,  we  find  that  refinements  of  methods 
designed  to  limit  losses  are  fixed  to  those  that  will  be  economical  at  rather 
low  prices.  For  instance,  we  find  copper  plants  are  planned  to  make 
savings  that  will  be  economical  at  13-cent  copper  instead  of  at  25-cent 
copper;  lead  plants  are  planned  for  4-cent  lead  and  not  for  6-cent lead,  etc. 

Waste  in  Exploitation. — At  this  point  it  may  be  pertinent  to  remark 
that  questions  of  mere  economy  and  profit  may  come  into  conflict  with 
public  policy.  Much  has  been  said  about  the  necessity  of  conserving 
the  forests  of  the  United  States.  A  forest  when  denuded  is  not  beyond 
the  possibility  of  ultimate  replacement;  an  orebody  or  a  coal  seam,  on 
the  other  hand,  once  destroyed  is  gone  forever.  It  is  very  likely  out  of 
the  sphere  of  the  Government  to  interfere  in  the  disposition  of  properties 
that  have  passed  to  private  ownership,  but  it  is  quite  feasible  for  the 
Government  to  take  measures  to  prevent  undue  waste  in  the  exploitation 
of  the  lands  that  it  still  retains;  and  it  seems  fully  worth  while  for  large 
private  proprietors  to  consider  the  future  as  well  as  the  present  and  to 
take  measures  to  prevent  some  of  the  shameful  wastes  that  are  going  on. 

For  instance,  no  one  will  deny  that  ultimately  the  world  will  need 
every  ton  of  coal  that  can  be  had.  Future  generations  will  be  very 
glad  to  mine  coal  from  2-ft.  seams,  many  of  which  are  now  utterly  de- 
stroyed by  the  working  out  of  thicker  seams  not  far  below  them.  Simi- 
larly, it  would  seem  worth  while  for  land  owners  to  bring  pressure  to 
bear  in  the  working  of  metal  deposits  like  those  of  southwestern  Missouri 
where  there  is  a  waste  of  at  least  50  per  cent,  of  the  zinc,  and  at  Lake 
Superior  where  there  is  an  enormous  waste  of  low-grade  iron  ores  which 
have  been  caved  in  and  left  behind  during  the  extraction  of  richer  por- 
tions. Wherever  the  introduction  of  these  economies  in  material  can 
"be  effected  without  financial  loss,  their  introduction  can  do  the  operators 
no  harm  and  will  certainly  be  a  benefit  to  the  land  owners  and  to  the 
public  at  large. 

Statement  of  Mining  Costs. — A  true  statement  of  mining  costs,  there- 
fore, should  with  due  consideration  of  the  above  factors  fall  under  the 
following  headings : 

(1)  General  expense  of  the  company 1 

Exploration  and  development 2 


(2)  Mining 


(3)  Milling 


(4)  Smelting,  refining 
and  marketing. . 


Stoping  cost 3 

Stoping  and  sorting  losses 4 

Amortization  of  mining  plant 5 

Transportation  to  mill 6 

Operating  costs 7 

Losses 8 

Amortization  of  milling  plant 9 

Transportation  to  smelter 10 

Operating  costs 11 

Losses 12 

Amortization  of  smelting  plant 13 


FACTORS  GOVERNING  VARIATIONS  OF  COST  57 

Unfortunately  it  is  impossible  to  treat  the  subject  so  comprehensively 
owing  to  the  absence  of  adequate  reports.  Most  companies  are  igorant 
of  both  their  costs  and  their  losses;  some  know  their  costs  but  do  not 
know  their  losses;  very  few  know  both.  Some  of  the  most  scientifically 
managed  concerns,  like  the  American  Smelters  Securities  Company, 
issue  very  few  reports,  although  the  management  of  this  company  does 
publish  one  report,  that  of  the  Esperanza  Limited,  which  tells  the  whole 
story,  but  even  in  that  model  statement  there  is  no  specific  reference  to 
the  amortization  costs  nor  to  mining  and  smelting  losses. 

Where  a  company  does  not  own  a  mill  or  smelter  it  cannot,  of  course, 
state  details  for  any  amortization  charges  or  operating  costs  or  losses 
for  those  departments.  Nevertheless,  these  things  cannot  be  ignored 
either  scientifically  or  commercially.  Charges  for  them  are  fixed  by 
contract.  When  a  mine  sells  its  ore  to  a  smelter  it  pays  commercially 
for  amortization  and  operation  of  the  smelter  under  treatment  charges 
and  for  the  losses  by  arbitrary  deductions. 

In  the  absence  of  such  reports  as  will  give  the  essentials  the  most 
feasible  plan  of  treating  the  subject  seems  to  be  to  divide  the  costs  into 
three  main  headings:  (1)  Mining,  including  development;  (2)  milling, 
including  transportation  from  mine;  (3) smelting,  refining,  and  marketing, 
including  transportation  from  mill  and  to  markets. 

Generally  the  reports,  or  reliable  information,  are  sufficient  to  give  a 
fairly  close  approximation  to  the  costs.  It  is  seldom  indeed  that  any 
statement  can  be  found  showing  the  charge  to  be  made  under  each  of 
these  headings  for  amortization  of  plants,  but  there  is  usually  some  means 
of  getting  an  idea  of  it.  This  can  be  done  many  tim.es  by  simply  ignoring 
credits  to  capital  on  construction  accounts  over  a  considerable  period  of 
years.  This  can  be  done  on  the  logical  principle  that  since  the  construc- 
tion is  all  for  the  benefit  of  the  operation  of  the  mine  it  should  all  be 
absorbed  in  operating  accounts.  It  will  hardly  be  advisable  to  give 
in  all  cases  the  sources  of  information  on  which  the  cost  estimates  are 
based ;  but  it  is  possibly  worth  while  to  assert  that  the  figures  are  not  far 
from  the  truth  in  spite  of  certain  differences  from  published  statements. 

Management. — In  discussing  the  factors  that  determine  the  cost  of 
mining  I  have  touched  thus  far  only  upon  the  tangible  and  definite  ones 
of  whose  importance  we  can  get  a  more  or  less  logical  measure;  but  the 
discussion  would  not  be  complete  without  some  mention  of  the  intangible 
and  unmeasured  but  important  factor  of  management.  I  wish  to  apply 
the  term  in  its  broadest  sense  and  include  in  it  the  financing  of  an  enter- 
prise, the  determination  of  its  scope,  the  selection  of  its  methods,  and 
its  administration. 

To  begin  with,  it  is  noticeable  that  enterprises  in  a  given  district 
have  much  in  common  and  are  apt  to  differ  in  methods  from  the  enter- 
prises of  other  districts.  For  instance,  in  Cripple  Creek  it  is  rare  for  a 


58  THE  COST  OF  MINING 

mining  company  to  treat  its  own  ores,  while  in  Butte  most  companies 
have  done  so;  in  the  Lake  Superior  copper  mines  the  underground  work 
is  done  largely  by  contract  with  the  miners,  while  in  Arizona  this  is 
exceedingly  rare,  and  so  on.  Each  district  has  its  own  peculiar  methods. 

There  is  a  probability  that  the  methods  of  a  given  district  are  pretty 
nearly  correct  because  they  are  inevitably  the  result  of  experiment,  or 
evolution,  and  the  fit  have  survived.  It  is  logical  to  expect  this.  When  a 
man  comes  into  a  district  that  is  new  to  him  and  says  that  the  industrial 
methods  in  use  there  are  wrong,  he  does  nothing  less  than  declare  that  the 
thousands  of  people  who  have  developed  those  methods  are  either 
ignorant  or  stupid  or  lacking  in  enterprise.  Once  in  a  thousand  times  he 
may  be  right;  in  999  cases  he  doesn't  know  what  he  is  talking  about. 

To  illustrate  how  profoundly  true  this  principle  is  even  in  the  face 
of  reasons  to  the  contrary,  I  may  be  pardoned  for  relating  an  experience 
of  my  own:  While  traveling  on  the  slopes  of  the  Andes  in  Ecuador  ten 
years  ago  I  noticed  that  my  traveling  companion,  a  Spanish-American, 
did  not  wash  or  bathe,  but  carried  in  his  vest  pocket  a  small  bottle  with 
which  he  occasionally  rubbed  his  nose.  Whenever  we  came  to  a  stream 
I  would  very  likely  take  a  bath.  To  this  Rodriguez  objected  vigorously, 
saying,  "If  you  want  to  live  in  this  country  without  getting  the  fever, 
you  must  observe  two  rules,  namely,  sleep  in  a  closed  room,  and  don't 
bathe  out  of  doors."  I  told  him,  and  thought  that  the  true  laws  of  health 
demanded  fresh  air  and  cleanliness,  and  probably  every  Anglo-Saxon 
would  have  said  the  same  thing.  But,  on  returning  to  this  country  a 
few  months  later,  I  heard  of  the  mosquito  theory  of  malaria  and  saw  a 
new  light.  Rodriguez,  was  right.  Observation  had  taught  the  natives 
empirically  two  ways  of  keeping  off  mosquitoes  and  fairly  effective  ways. 
They  could  not  give  the  reasons  but  they  got  results.  It  is  quite  true 
that  a  mosquito  net  is  just  as  good  as  a  coat  of  dirt  to  ward  off  the  fever- 
bearing  insect,  and  that  by  means  of  it  one  may  also  enjoy  the  luxury  of 
fresh  air;  but  the  point  is  the  mosquito  must  be  kept  out.  The  person  who 
does  not  realize  this  is  running  a  risk  of  death  from  sheer  ignorance.  The 
same  thing  may  be  said  of  superficial  criticism  of  customs  in  general 
and  of  mining  customs  in  particular.  There  is  very  apt  to  be  a  "joker" 
in  the  game  of  the  rash  innovator  and  he  may  find  himself  and  his  new 
methods  up  against  a  hand  of  five  aces. 

I  feel,  therefore,  that,  as  a  general  rule,  it  is  unfair  and  stupid  to 
measure  the  methods  of  one  district  by  the  standards  of  another,  but 
this  does  not  mean  that  the  methods  in  use  are  always  the  best.  Among 
operators  in  the  same  district,  where  all  are  equally  conversant  with 
the  governing  factors  of  the  situation,  we  will  invariably  find  some  "who 
get  better  results  than  others.  We  will  find,  running  side  by  side  mines 
that  show  great  and  apparently  inexplicable  differences  in  cost.  We 
will  find  in  any  district  examples  of  mines  that  have  failed  under  one 


/ 


FACTORS  GOVERNING  VARIATIONS  OF  COST  59 

management  and  succeeded  under  another.  While  the  effect  of  man- 
agement is  well  understood  by  every  one,  it  does  not  lend  itself  to  ex- 
pression in  figures;  nevertheless  there  are  some  things  that  may  be  said 
of  it  of  a  nature  pertinent  to  this  discussion. 

On  thing  has  been  noted  as  a  rule;  viz.,  rich  mines  cost  more  to  run 
than  low-grade  mines.  It  is  generally  conceded  that  this  is  to  be  ex- 
plained by  the  liberality  of  the  carefree.  There  is  something  more  than 
this.  Suppose  two  deposits  are  found  20  miles  apart,  one  of  ore  worth 
$5  a  ton,  and  the  second  worth  $2  a  ton.  The  first  is  opened  up  by 
the  first  method  that  occurs  to  the  owners,  the  ore  is  shipped  and  it  is 
discovered  that  is  costs  $3  a  ton  to  mine  it.  The  owners  congratulate 
themselves  on  their  40  per  cent,  profits.  Their  business  is  established; 
they  are  making  lots  of  money;  to  make  changes  and  improvements  is 
laborious,  expensive,  may  involve  delay  in  marketing  the  product  and 
may  not  turn  out  well  after  all.  Why  not  leave  well  enough  alone? 

The  second  body  of  only  $2  ore,  after  being  opened  up,  is  left  alone 
for  a  while.  It  is  considered  too  low-grade  to  pay.  But  some  enter- 
prising person  at  last  comes  along  who  thinks  it  may  be  worked.  He 
chooses  for  a  superintendent,  not  the  first  man  he  meets,  last  of  all 
some  friend  or  relative,  but  some  one  he  thinks  able  to  get  results.  All 
possible  methods  are  studied  in  order  to  choose  the  cheapest.  All 
possible  precautions  are  used  to  avoid  unnecessary  expenditures  on 
plant.  Every  employee  is  impressed  with  the  necessity  of  efficiency. 
After  the  enterprise  is  finally  going  it  proves  that  the  ore  is  being  mined 
at  $1.20  per  ton  and  the  triumphant  owner  of  the  $2  ore  also  secures 
40  per  cent,  profit  on  his  product. 

Logical  Reason  for  Rich  Mines  Costing  More. — There  may  be  no 
physical  reason  for  this  difference  in  cost;  there  may  be  no  intentional 
.liberality  on  the  part  of  the  owners  of  the  richer  property.  Nevertheless, 
i  there  is  a  logical  ground  for  a  difference  in  the  selection  imposed  by 
J necessity,  In  the  rich  mine  there  is  no  necessary  selecton;  ergo  there  is 
no  selection.  We  may,  therefore,  count  on  a  certain  increment,  some- 
times very  large,  sometimes  very  small,  of  additional  expense  in  mining 
rich  ores  as  compared  with  poorer  ores. 

Necessity  may  work  vast  economies  in  the  same  mines.  The  Cham- 
pion iron  mine  at  Beacon,  Mich.,  was  producing  ore  in  1892  at  $2.50  a 
ton.  It  had  then  been  running  25  years  and  was  reputed  to  be  a  very  well 
managed  mine.  In  1899,  the  mine  was  deeper,  the  orebodies  smaller, 
wages  the  same,  the  plant  the  same,  the  management  the  same,  but  the 
ore  only  cost  $1.25  per  ton.  Necessity  had  worked  this  change  through 
the  panic  of  1893.  Similar  changes  were  wrought  in  other  mines. 

Hoover's  Theorem. — The  economic  ratio  of  treatment  capacity  of 
ore  reserves  is  a  question  that  has  been  brought  up  by  H.  C.  Hoover 
and  vigorously  discussed  by  many  prominent  engineers.  Ross  E.  Browne 


60  THE  COST  OF  MINING 

("Working  Costs  on  the  Witwatersrand ")  has  recently  brought  addi- 
tional evidence  to  bear  out  the  correctness  of  Mr.  Hoover's  conclusions 
that  economically  mines  should  be  worked  out  with  great  rapidity  and 
that  additional  plant  should  be  provided  for  the  extraction  of  discovered 
ores  within  periods  of  from  three  to  six  years.  There  seems  to  be  no 
doubt  of  the  mathematical  correctness  of  this  conclusion,  but  it  seems  to 
apply  logically  only  to  gold  mines  where  there  is  no  practical  limit  to 
the  sale  of  the  output.  In  the  mining  of  products  other  than  gold  it 
seems  that  a  limitation  is  put  upon  the  output  by  the  market.  In  the 
case  of  Lake  Superior  iron  ores,  for  example,  there  are  fifteen  hundred 
million  tons  in  sight.  To  work  these  all  out  and  convert  them  into  pig 
iron  in  six  years  is  not  only  a  physical  impossibility,  but  would  be  econom- 
ically absurd.  It  is  not  at  all  absurd,  however,  for  an  isolated  operator 
among  many  to  apply  this  principle  to  his  own  profit.  It  may  be  that 
the  application  of  this  very  principle  has  resulted  in  the  formation  of 
gigantic  trusts.  It  seems  probable  that  the  growth  of  the  Carnegie 
Steel  Company  in  competition  with  its  neighbors  may  have  been  largely 
due  to  the  application  of  this  idea  to  steel  manufacturing;  but  in  course  of 
being  fully  worked  out,  the  result  was  the  formation  of  the  United  States 
Steel  Corporation  which  now  controls  75  per  cent,  of  the  iron  ores  of  Lake 
Superior  and  from  mere  extent  of  growth  has  landed  in  a  position  where 
the  application  of  Mr.  Hoover's  principle  is  no  longer  possible.1 

Economy  and  Speed. — It  is  to  be  remarked  in  this  connection  that  a 
wide-awake  manager  may  see  his  way  clear  to  overlook  questions  both  of 
a  high  percentage  of  extraction  and  of  cheap  work  to  reap  the  benefits 
incident  to  speed.  Take,  for  example,  a  body  of  soft  iron  ore  of  limited 
cross-section  pitching  rather  steeply  into  the  earth.  The  requirements 
of  thorough  extraction  and  cheap  working  would  very  likely  be  satisfied 
by  the  use  of  the  slicing  system  of  mining,  but  in  such  a  case  the  volume  of 
product  would  be  limited  because  the  area  on  which  slicing  can  be  con- 
ducted is  practicaly  limited  to  a  single  horizontal  section  of  the  orebody. 
This  limitation  of  the  product  during  years  of  high  prices  might  be  a  very 
serious  handicap  and  it  would  probably  be  wise  to  adopt  a  different  system, 
perhaps  less  effective  and  more  costly,  but  which  would  allow  the  working 
of  a  number  of  levels  at  once  and  the  turning  out  of  a  large  output  at  an 
advantageous  time. 

The  management  of  large  properties  may  come  into  conflict  with 
public  economy  in  the  following  way:  Large  sums  of  money  are  locked 
up  in  the  purchase  of  great  tracts  of  mineral  lands,  far  in  excess  of  the 
requirements  of  the  immediate  future.  The  sums  thus  invested  are 
usually  raised  by  bond  issues  and  the  interest  on  these,  together  with 
taxes,  amount  annually  to  large  sums  which  the  public  must  pay.  These 

1  These  were  the  figures  in  1908.     Since  then  changes  and  developments  have 
altered  the  proportions  somewhat. 


FACTORS  GOVERNING  VARIATIONS  OF  COST  61 

charges  are  inevitable,  and  are  quite  independent  of  any  desire  on  the 
part  of  such  holders  to  raise  prices  through  the  opportunities  afforded 
by  the  existence  of  partial  monopolies.  Conspicuous  examples  of  this 
state  of  affairs  are  afforded  by  the  United  States  Steel  Corporation,  es- 
pecially since  it  has  absorbed  the  Tennessee  Coal,  Iron,  and  Rail- 
road Company,  and  by  the  Philadelphia  &  Reading  Coal  and  Iron 
Company.  Both  of  these  great  corporations  have  mineral  lands  sufficient 
to  guarantee  their  product  far  into  the  future,  but  they  represent  invest- 
ments on  which  charges  of  many  million  dollars  a  year  must  be  paid 
without  any  immediate  return. 


CHAPTER  V 

PARTIAL  AND  COMPLETE  COSTS 

TERMINOLOGY  AND  METHODS  OF  ANALYSIS — PARTIAL  AND  COMPLETE  COSTS — OPERAT- 
ING,   MAINTENANCE,    DEPRECIATION,    AND    AMORTIZATION DIVIDEND    COSTS    AND 

SELLING  COSTS EXAMPLES  OF  DEPRECIATION ANALYSIS  OF  COST  STATEMENTS — 

AMORTIZATION  TABLES — TABLE  OF  PLANT  COST  PER  ANNUAL  TON  AND  LIFE  OF 
MINES — INVESTORS'  PRECAUTIONS. 

I  KNOW  from  experience  that  many  operating  men,  though  deep  in 
details,  are  acquainted  only  with  partial  costs.  Their  point  of  view 
does  not  reach  the  tout  ensemble.  For  instance,  a  man  may  be  in  charge 
of  a  mine  and  called  manager  or  superintendent.  His  business  ends  when 
the  ore  is  delivered  into  cars  to  be  shipped  to  the  mill.  Up  to  that  point 
he  thinks  he  is  familiar  with  the  costs.  Probably  he  is  not,  though  he 
may  be.  It  is  more  likely  that  he  knows  little  or  nothing  about  the 
capital  invested  in  the  mine  and  the  average  annual  value  of  it.  He 
is  probably  full  of  information  about  the  current  operating  costs  of  his 
one  department — the  mine.  He  does  not  know  what  is  involved  in 
transportation  to  the  mill,  in  milling,  in  smelting,  in  general  expense. 
His  knowledge  of  the  business  as  a  whole  is  very  limited.  In  talking 
with  other  mining  men  he  may  be  elated  or  depressed  at  learning  that  his 
costs  are  lower  or  higher  than  theirs,  but  he  may  find  out  later  that  he  has 
reasoned  from  false  premises.  He  is  really  talking  about  a  segment  of  the 
business  to  men  who  are  also  talking  about  segments  of  the  business, 
and  the  segments  may  be,  and  are  very  likely  to  be,  different  in  each  case. 

Now  such  a  man  is  very  apt  to  graduate  into  a  mining  engineer  and  to 
examine  mines  and  report  on  them  without  once  giving  consideration  to 
the  limitations  he  is  under.  He  repairs  by  experience  some  of  his  mis- 
apprehensions, but  his  conception  of  the  business  is  very  likely  to  remain 
only  a  partial  conception;  at  the  best  he  is  clear  about  only  a  part  and 
hazy  about  the  rest. 

The  costs  reported  to  stockholders  and  investors  are  very  apt  to  be 
only  partial  costs.  They  are  almost  never  so  expressed  as  to  give  one  a 
true  understanding  of  the  business.  This  may  not  be  intentional; 
merely  a  narrow  view  of  the  financial  realities.  In  the  following  chapters 
I  shall  review  the  statements  of  many  mining  companies  and  it  will  be 
seen  that  I  have  reconstructed  nearly  all  of  them,  putting  my  own  inter- 
pretation upon  their  figures  and  in  many  cases  rejecting  their  figures  as 
inadequate  and  substituting  others.  I  would  not  be  rash  enough  to 
do  such  things  without  reason.  It  is  in  every  case  merely  drawing  an 

62 


PARTIAL  AND  COMPLETE  COSTS  63 

irresistible  conclusion,  such  conclusions  as  no  two  men  would  argue 
about  so  long  as  they  had  the  same  point  of  view.  I  propose  here  to 
describe  my  method  and  point  of  view  in  cost  analysis;  but  first  I  shall 
define  certain  expressions  that  are  in  common  use  in  this  discussion. 

There  is  a  certain  confusion  in  the  use  of  the  terms,  operating,  main- 
tenance, depreciation,  and  amortization.  In  this  book  I  intend  to  have  a 
perfectly  clear  meaning  for  three  of  these  terms.  Maintenance  is  a  term 
to  which  I  attach  little  importance.  It  is  simply  the  cost  of  keeping 
things  in  good  order  and  is  an  undeniable  operating  item.  I  shall  assume 
under  all  circumstances  that  maintenance  is  included  under  the  head 
of  operating. 

Operating,  or  current  operating,  charges  are  those  that  relate  to  the 
obtaining  of  product.  It  includes  all  the  labor,  salaries,  and  supplies 
used  on  the  actual  yield  of  a  mine  for  a  limited  period,  but  excludes  all 
charges  that  may  be  a  preparation  for  a  yield  to  be  obtained  later. 
Note  that  I  say  "for  a  limited  period;"  for  I  make  it  a  cardinal  and  self- 
evident  axiom  that  whenever  we  extend  our  point  of  view  to  the  whole 
life  of  a  mine  or  property,  we  immediately  abolish  the  difference  between 
operating  and  capital  costs.  Then  all  expenses  are  operating  expenses. 

The  capital  charges  of  depreciation  and  amortization  are  only  suspense 
accounts  intended  to  exhibit  the  difference  between  operating  for  a  short 
period  and  operating  for  the  whole  period.  Now  unless  we  are  holding 
a  post-mortem  examination  on  a  dead  mine  we  never  know  just  what  the 
difference  is.  These  items  then  are  estimates,  and  I  feel  it  necessary, 
in  order  that  one  may  understand  my  cost  analyses,  to  explain  carefully 
how  I  make  these  estimates. 

Frequent  reference  will  be  found  in  coming  chapters  to  dividend 
costs  and  to  selling  costs.  By  selling  cost  I  mean  the  real  or  complete 
cos.tr  the  cost  at  which  the  product  must  be  sold  to  justify  the  enterprise. 
It  includes  all  capital  employed,  with  interest  for  the  whole  period  of 
operating.  Obviously,  if  these  total  expenditures  amount  to  say  $10,- 
000,000  and  the  total  return  is  only  $9,500,000,  the  enterprise  is  not  a  suc- 
cessful one.  But  suppose  that  of  the  ten  millions  spent,  the  sum  of  three 
millions  is  represented  by  two  millions  spent  on  initial  plant  and  one 
million  for  interest  on  that  sum  at  5  per  cent,  for  10  years  during  which 
there  were  no  dividends.  These  three  million  dollars  are  not  operating 
charges,  at  least  they  are  no.t  the  current  daily  operating  charges  that  the 
mine  manager  knows  about.  His  operating  charges  are  only  $7,000,000 
while  the  proceeds  are  $9,500,000.  Here  we  have  $2,500,000  to  be 
paid  in  dividends.  Here  our  selling  cost  is  $10,000,000.  The  enterprise 
is  really  a  failure  unless  our  returns  equal  that  amount.  But  the  dividend 
cost  is  only  $7,000,000.  This  sort  of  a  difference  is  practically  universal 
in  mining  cost  statements.  I  never  knew  of  one  in  which  the  real  selling 
cost  was  calculated. 


64  THE  COST  OF  MINING 

As  a  general  rule  the  cost  of  production  is  understated  much  more  than 
it  would  be  in  this  case  if  it  were  given  at  7  instead  of  10;  because 
7,  the  dividend  cost,  is  in  itself  a  composite  figure.  It  consists  of  two 
elements:  (a)  those  costs  that  plainly  belong  to  merely  getting  out  the  pro- 
duct, and  (6)  some  other  costs  that  seem  to  be  creating  something  perma- 
nent, but  really  are  not.  These  things  are  apt  to  be  euphemized  into 
" capital  charges."  In  the  hypothetical  case  7,  being  the  dividend  cost, 
is  very  apt  to  be  made  up  of  the  figures  5  and  2;  the  first  being  "working 
charges "  and  the  second  being  "construction."  This  construction  seems 
to  be  permanent;  it  is  "doing  great  things  for  the  property,"  "working 
wonders."  In  fact  it  is  absolutely  essential;  but  it  must  be  paid  for 
before  dividends  appear,  and  therefore  is  included  in  the  dividend  cost: 
but  our  euphemistic  report  gives  the  working  cost,  the  cost  of  production, 
at  5. 

Remembering  that  we  found  at  the  very  beginning  that  the  real  cost 
was  10,  we  must  explain  that  the  difference  is  made  up  of  amortization 
and  depreciation.  Amortization  accounts  for  the  difference  between 
10  and  7,  depreciation  accounts  for  the  further  difference  between  7 
and  5.  The  omission  of  these  sums  may  not,  possibly,  be  of  any  injury 
to  any  one;  but  it  certainly  results  in  an  outrageous  underestimate  of 
costs. 

By  depreciation,  then,  I  mean  current  construction  costs;  improve- 
ments. Until  a  mine  is  dead  and  ready  to  be  buried  in  a  watery  grave 
there  are  always  expenses  of  this  kind.  Depreciation  means  literally 
the  process  of  losing  value:  practically  it  means  the  exact  opposite;  it 
means  expenses  undertaken  to  counteract  loss  of  value.  It  may  be  asked, 
why  is  this  not  maintenance?  It  is  maintenance.  It  only  seems  not  to 
be  maintenance  because  the  items  that  compose  these  charges  have  the 
appearance  of  being  new  plant,  not  merely  replacements  of  old  plant. 
I  shall  give  some  examples. 

Let  us  suppose  a  mine  to  be  started  on  a  very  large  tract  of  land  (to 
avoid  all  complications  except  natural  ones,  let  us  get  rid  of  our  neigh- 
bors), with  a  vein  running  north  and  south  and  dipping  vertically.  Two 
shafts  are  started,  a  mill  erected  and  the  property  put  in  operation. 
At  the  depth  of  500  ft.  the  south  shaft  runs  out  of  the  ore;  but  the 
north  shaft  is  in  good  ore  at  700  ft.  Every  level  goes  farther  in  that 
direction  than  the  one  above  it.  A  new  shaft  must  be  sunk,  No.  3, 
further  north.  It  must  be  sunk  1500  ft.  at  a  cost  of  $150,000  before  it 
produces  anything. 

Such  an  expenditure  is  often  set  down  as  "capital,"  but  this  would  be 
frequently  misleading.  The  construction  and  equipment  of  No.  3  shaft 
is  pure  depreciation — an  expenditure  that  should  be  written  off  to  operat- 
ing as  fast  as  it  is  made.  No.  3  does  nothing  but  take  the  place  of  the 
south  shaft. 


PARTIAL  AND  COMPLETE  COSTS  65 

Again,  the  original  north  shaft  has  reached  the  bottom  of  the  ore. 
"We  have  again  been  disappointed.  It  was  unfortunate  that  we 
equipped  No.  3  as  we  did, "  I  might  quote  from  an  imaginary,  but  very 
frequent  report,  "  because  certain  unforeseen  conditions  have  arisen  that 
make  it  evident  that  a  different  plant  would  have  served  our  purpose 
better.  It  is  found  now  that  the  ore  shoot  has  a  pitch  averaging  54°  to 
the  north  along  the  plane  of  the  vein.  Evidently  a  shaft  inclined  to  the 
northward  at  that  angle  would  follow  the  ore.  A  single  shaft  like  that 
would  accomplish  our  purpose  as  well  as  a  number  of  vertical  ones,  or  a 
series  of  long  drifts  from  a  single  vertical  one.  Moreover,  we  find  that 
at  the  1500-ft.  level  of  No.  3  shaft  the  vein,  instead  of  standing  vertical 
as  it  has  above,  is  now  dipping  to  the  west  at  an  angle  of  only  45°.  After 
mature  consideration  it  has  been  decided  that  our  best  course  will  be 
to  put  a  curve  in  No.  3  shaft  and  change  it  into  an  incline  below  the 
1500-ft.  level,  following  the  oreshoot  in  a  northwesterly  direction.  This 
will  necessitate  changing  our  equipment.  Our  flat  rope  hoist,  designed 
for  handling  cages  in  a  vertical  shaft,  must  be  replaced  by  a  round  rope 
engine  with  a  drum.  We  must  install  skips,  for  which  our  engineers  assure 
us  it  will  be  best  to  cut  undergrouud  loading  pockets."  It  is  useless 
to  proceed  further.  It  is  the  same  problem  that  caused  the  sinking  of 
No.  3  shaft.  The  solution,  however,  appears  new. 

One  might  cite  "capital  charges/'  "construction"  or  whatever 
it  is  called,  in  hundreds  of  cases  like  the  above.  The  same  thing  appears 
in  all  kinds  of  disguises.  There  are  always  expenditures  going  on  that 
appear  to  be  for  permanent  improvements,  really  are  for  permanent 
improvements,  but  which  are  really  nothing  but  expenses  required  to 
keep  the  property  from  depreciating;  in  other  words,  to  enable  it  to  be  a 
good  plant  and  not  get  antiquated,  or  no  longer  adequate  to  changed 
requirements.  Money  is  even  spent  uselessly,  often  merely  for  fashion; 
for  fashion  is  so  far  from  being  confined  to  women's  finery  that  it  reaches 
the  methods  and  appliances  in  the  depths  of  mines. 

Sometimes  construction  that  amounts  to  nothing  but  depreciation  is 
combined  with  construction  that  does  make  a  real  addition  to  capacity 
and  earning  power  and  is  truly  capital.  It  is  necessary,  therefore,  to 
explain  that  in  the  analyses  of  cost  in  the  following  chapters  I  have  not 
followed  any  exact  rule.  The  analysis  is  founded  on  the  circumstances 
exhibited  by  the  reports.  These,  however,  fall  into  two  general  groups: 
rich  mines  that  have  built  up  their  plants  entirely  out  of  profits  or  in 
which  at  least  there  has  been  a  continuous  growth  so  that  the  original 
capital  is  only  an  insignificant  fraction  of  the  total  investment;  and  low- 
grade  mines  not  rich  enough  to  start  themselves  and  not  profitable  enough 
to  make  the  original  investment  soon  disappear.  In  the  first  case  I  make 
no  attempt  at  calculating  amortization,  but  adopt  the  much  simpler 
method  of  writing  off  all  expenditures,  over  as  long  a  period  as  I  can 


66  THE  COST  OF  MINING 

get  figures  for,  to  the  cost  of  the  production.  In  the  second  case  I  charge 
all  expenditures  of  every  kind  to  capital  up  to  the  time  when  the  mine 
is  producing.  After  it  is  producing  I  charge  to  capital  those  expenditures 
made  to  increase  the  capacity  until  the  mine  has  reached  what  appears 
to  be  an  average  production.  Then  this  total  is  written  off,  with  inter- 
est, over  a  period  that  seems  reasonable,  by  charging  up  each  year  a 
sum  calculated  to  retire  the  investment  within  the  required  time. 

This  charge  is  the  amortization  of  capital. 

Ordinarily  I  put  the  period  of  initial  capital  expenditure  as  far  back 
as  possible  and,  unless  the  increase  of  capacity  is  very  considerable,  I 
charge  off  the  yearly  new  construction  to  operating  and  call  it  deprecia- 
tion. In  most  cases  those  who  are  interested  will  see  from  the  cost 
analyses  themselves  the  method  adopted. 

A  word  further  about  amortization.  When  the  sum  to  be  written 
off  is  determined  it  is  necessary  to  fix  two  further  elements;  the  rate 
of  interest  to  be  charged  and  the  period  in  which  the  principal  must  be 
extinguished.  The  first  I  have  taken  in  all  cases  at  5  per  cent.  The  sec- 
ond is  the  great  field  where  judgment  and  experience  come  into  play; 
wherein  the  mining  business  exhibits  its  peculiarities  and  where  it  is 
different  from  any  other  form  of  commercial  enterprise.  We  must 
discuss  it  fully,  but  first  let  us  show  the  methods  by  which  amortization 
may  be  calculated.  One  way  is  shown  by  the  following  table  in  which 
a  sum  of  money  is  returned  to  the  investor  in  equal  installments,  which 
which  are  supposed  to  be  part  interest  and  part  principal.  The  part 
that  represents  the  return  of  principal  for  each  year  is  deducted  from 

AMORTIZATION  TABLE. —  5  PER  CENT. 

Showing  number  of  years  in  which  $1,000  is  cancelled  at  5  per  cent,  annual  interest 
and  5  per  cent,  amortization,  or  $100  annual  installment. 


Years 

Amortized                               Interest 

Balance  due 

1 

50.00 

50.00 

950.00 

2 

52.50 

47.50 

897.50 

3 

55.12 

44.88 

842  .  38 

4 

57.88 

42.12 

784.50 

5 

60.77 

39.23 

723.73 

6 

63.81 

36.19 

659.92 

7 

67.00 

33.00 

592  .  92 

8 

70.35 

29.65 

522.57 

9 

73.87 

26.13 

448  .  70 

10 

77.56 

22.44 

371.14 

11 

81.44 

18.56 

289.70 

12 

85.51 

14.49 

204.19 

13 

89.79 

10.21 

114.40 

14 

94.28 

5.72 

20.12 

15 

98.99 

1.01 

0.00 

PARTIAL  AND  COMPLETE  COSTS 


67 


the  original  sum,  and  for  the  next  year  interest  is  calculated  only  on  the 
diminished  principal;  but,  since  the  yearly  installments  are  equal,  as 
the  yearly  interest  requirements  diminish  the  part  applying  to  the 
return  of  principal  will  increase  so  that  the  extinction  of  capital  becomes 
progressively  more  and  more  rap'd. 

Another  method  of  extinguishing  capital  by  annual  installments  is 
by  creating  a  sinking  fund  which  will  increase  by  investment.  The  sum 
of  the  investment  of  annual  installments  with  accrued  interest  is  supposed 
to  equal  the  capital  at  the  end  of  the  required  period.  The  following 
tables  designed  to  exhibit  this  method  are  taken  from  Hoover's  Principles 
of  Mining. 

PRESENT  VALUE  OF  AN  ANNUAL  DIVIDEND  OVER  —  YEARS  AT  —  PER  CENT.  AND  RE- 
PLACING CAPITAL  BY  REINVESTMENT  OF  AN  ANNUAL  SUM  AT  4  PER  CENT. 


Years 

5  per  cent. 

6  per  cent. 

7  per  cent. 

8  per  cent. 

9  per  cent. 

10  per  cent. 

1 

0.95                0.94 

0.93 

0.92 

0.92 

0.91 

2 

1  .  85                1  .  82 

1  .  78                1  .  75 

1.72 

1.69 

3 

2.70 

2.63 

2  .  56                2  .  50 

2.44 

2.38 

4 

3.50               3.38 

3.27 

3.17 

3.07 

2.98 

5 

4.26                4.09 

3.93 

3.78 

3.64 

3.51 

6 

4.98 

4.74 

4.53                4.33 

4.15 

3.99 

7 

5.66 

5.36 

5.09                4.84 

4.62 

4.41 

8 

6.31                5.93 

5.60               5.30                5.04 

4.79 

9 

6.92                6.47 

6.08                5.73 

5.42 

5.14 

10 

7.50                6.98 

6.52 

6.12 

5.77 

5.45 

11 

8.05                7.45 

6.94                6.49 

6.09 

5.74 

12 

8.58                7.90 

7.32                6.82                6.39 

6.00 

13 

9.08                8.32 

7.68 

7.13 

6.66 

6.24 

14 

9.55 

8.72 

8.02 

7.42 

6.91 

6.46 

15 

10.00                9.09 

8.34 

7.79 

7.14 

6.67 

16 

10.43                9.45 

8.63                7.95 

7.36 

6.86 

17 

10.85                9.78 

8.91 

8.18                7.56 

7.03 

18 

11.24 

10.10 

9.17 

8.40 

7.75 

7.19 

19 

11.61 

10.40 

9.42                8.61 

7.93 

7.34 

20 

11.96 

10.68 

9.65                8.80               8.09 

7.49 

21 

12.30 

10.95 

9.87                8.99 

8.24 

7.62 

22 

12.62 

11.21 

10.08                9.16 

8.39 

7.74 

23 

12.93 

11.45 

10.28                9.32 

8.52 

7.85 

24 

13.23 

11.68 

10.46                9.47 

8.65 

7.96 

25 

13.51 

11.90 

10.64                9.61 

8.77 

8.06 

26 

13.78 

12.11 

10.80                9.75 

8.88 

8.16 

27 

14.04 

12.31 

10.96                9.88 

8.99 

8.25 

28 

14.28 

12.50 

11.11              10.00 

9.09 

8.33 

29 

14.52 

12.68 

11.25 

10.11 

9.18 

8.41 

30 

14.74 

12.85 

11.38 

10.22 

9.27 

8.49 

68 


THE  COST  OF  MINING 


PRESENT  VALUE  OF  AN  ANNUAL  DIVIDEND  OVER  —  YEARS  AT  —  PER  CENT.  AND  RE- 
PLACING CAPITAL  BY  REINVESTMENT  OF  AN  ANNUAL  SUM  AT  4  PER  CENT.     Continued 


Years 

5  per  cent. 

6  per  cent. 

7  per  cent. 

8  per  cent. 

9  per  cent. 

10  per  cent. 

31 

14.96 

13.01 

11.51 

10.32 

9.36 

8.56 

32 

15.16 

13.17 

11.63 

10.42 

9.44 

8.62 

33 

15.36 

13.31 

11.75 

10.51 

9.51 

8.69 

34 

15.55 

13.46 

11.86 

10.60 

9.59 

8.75 

35 

15.73 

13.59 

11.96 

10.67 

9.65 

8.80 

36 

15.90 

13.72 

12.06 

10.76 

9.72 

8.86 

37 

16.07 

13.84 

12.16 

10.84 

9.78 

8.91 

38 

16.22 

13.96 

12.25 

10.91 

9.84 

8.96 

39 

16.38 

14.07 

12.34 

10.98 

9.89 

9.00 

40 

16.52 

14.18 

12.42 

11.05 

9.95 

9.05 

Annual  rate 
of 
dividend 

Number  of  years  of  life  required  to  yield  —  per  cent,  interest,  and  in  addition  to  fur- 
nish annual  installments  which,  if  re-invested  at  4  per  cent,  will  return  the  original 
investment  at  the  end  of  the  period. 

Per  cent. 

5  per  cent. 

6  per.  cent. 

7  per  cent. 

8  per  cent. 

9  per  cent. 

10  per   cent. 

6 

41.0 

7 

28.0 

41.0 

8 

21.6 

28.0 

41.0 

9 

17.7 

21.6 

28.0 

41.0 

10 

15.0 

17.7 

21.6 

28.0 

41.0 

11 

13.0 

15.0 

17.7 

21.6 

28.0 

41.0 

12 

11.5 

13.0 

15.0 

17.7 

21.6 

28.0 

13 

10.3 

11.5 

13.0 

15.0 

17.7 

21.6 

14 

9.4 

10.3 

11.5 

13.0 

15.0 

17.7 

15 

8.6 

9.4 

10.3 

11.5 

13.0 

15.0 

16 

7.9 

8.6 

9.4 

10.3 

11.5 

13.0 

17 

7.3 

7.9 

8.6 

9.4 

10.3 

11.5 

18 

6.8 

7.3 

7.9 

8.6 

9.4 

10.3 

19 

6.4 

6.8 

7.3 

7.9 

8.6 

9.4 

20 

6.0 

6.4 

6.8 

7.3 

7.9 

8.6 

21 

5.7 

6.0 

6.4 

6.8 

7.3 

7.9 

22 

5.4 

5.7 

6.0 

6.4 

6.8 

7.3 

23 

5.1 

5.4 

5.7 

6.0 

6.4 

6.8 

24 

4.9 

5.1 

5.4 

5.7 

6.0 

6.4 

25 

4.7 

4.9 

5.1 

5.4 

5.7 

6.0 

26 

4.5 

4.7 

4.9 

5.1 

5.4 

5.7 

27 

4.3 

4.5 

4.7 

4.9 

5.1 

5.4 

28 

4.1 

4.3 

4.5 

4.7 

4.9 

5.1 

29 

3.9 

4.1 

4.3 

4.5 

4.7 

4.9 

30 

3.8 

3.9 

4.1 

4.3 

4.5 

4.7 

PARTIAL  AND  COMPLETE  COSTS  69 

Let  us  now  return  to  the  problem  of  fixing  the  time  for  the  amorti- 
zation of  invested  capital.  As  remarked  above,  this  is  easy  in  the  case 
of  a  worked-out  mine.  To  do  it  accurately  in  the  case  of  a  living  and 
prosperous  mine  is,  frankly,  impossible.  But  as  this  is  a  vital  question 
for  every  investor  it  is  absolutely  necessary  to  give  an  answer,  be  it  cor- 
rect or  not.  For,  whether  the  investor  realizes  it  or  not,  he  is  always 
staking  his  capital  on  the  probability  of  having  it  returned  within  a  cer- 
tain time.  In  other  words,  he  is  gambling  on  the  life  of  the  mine.  If  a 
man  invests  money  in  a  mining  stock  which  yields  only  5  per  cent,  on 
the  price  he  pays  for  it,  and  if  at  the  same  time  he  can  get  5  per  cent,  on 
a  well-secured  bond,  he  must  calculate  that  the  mine  is  as  permanent  as 
the  bond.  If  he  gets  a  dividend  of  10  per  cent,  and  calculates  that  5 
per  cent,  is  a  sufficient  interest  on  his  money,  it  follows  that  he  is  counting 
on  a  life  of  at  least  fifteen  years  for  the  mine. 

It  happens  that  the  prdbable  life  of  mines  varies  between  wide  limits. 
In  the  case  of  coal,  building  stone,  cement,  iron  ore  (and  in  sporadic 
cases  among  precious  metal  ores),  it  has  been  proved  possible  to  find 
enough  ore  in  a  few  years  to  assure  the  life  of  the  enterprise  twenty 
or  more  years  in  advance.  Of  course  the  period  of  activity  in  sight  is 
the  minimum  amortization  period;  the  longer  the  period  the  more  stable 
the  investment,  because  the  longer  the  life  the  greater  the  probability 
of  equalizing  vicissitudes.  But  in  general  the  mines  that  can  see  ahead 
twenty  years  or  more  are  rare.  Many  profitable  ones  have  not  a  single 
year's  ore  in  sight  and  yet  the  probabilities  may  be  in  favor  of  a  consider- 
able life.  The  only  means  by  which  one  may  form  an  opinion  of  the 
probabilities  are  acquaintance  with  the  history  of  mines  and  ore  deposits, 
and  acquaintance  with  the  state  of  development  of  the  property,  the  rate 
of  extraction,  the  ore  in  sight,  and  the  soundness  of  the  management. 
The  cardinal  point  for  the  reader's  attention  is  the  varying  life  estimate 
for  various  types  of  mines,  and  the  highly  variable  rate  of  amortization 
that  this  estimate  imposes. 

How  These  Figures  Interest  the  Investor. — The  question  is  often 
asked,  What  bearing  do  these  theoretical  or  half-forgotten  questions 
about  capital  originally  invested,  and  its  theoretical  retirement,  have 
for  the  investor  who  buys  or  sells  stocks  in  mining  properties  at  valuations 
that  have  not  the  slightest  reference  to  the  original  investment  or  how  it  is 
disposed  of?  To  this  various  answers  may  be  given.  I  have  already 
pointed  out,  but  may  as  well  repeat  (it  cannot  be  repeated  too  often), 
that  exactly  the  same  considerations  apply  to  the  extinguishment  of  the 
price  paid  for  a  share  of  stock,  which  is  the  form  in  which  investment  is 
made  by  the  average  man,  as  apply  to  the  capital  used  to  build  a  mill. 
It  is  no  argument  to  say  that  mining  shares  are  mainly  used  as  counters 
in  a  game.  That  it  is  true  at  all  is  due  only  to  the  fact  that  a  portion  of 
the  public  is  imposed  upon  by  false  analogies;  they  are  often  induced  to 


70  THE  COST  OF  MINING 

buy  highly  speculative  mining  stocks  on  the  same  income  basis  as  they 
buy  the  soundest  securities.  The  very  mining  shares  that  I  have  called 
" highly  speculative "  might  in  many  instances  at  a  sane  valuation  be  just 
as ."  sound  "  as  the  soundest. 

A  sound  business  must  be  a  paying  business;  one  that  is  good  for 
both  interest  and  principal.  The  great  fault  with  the  mining  business 
from  the  point  of  view  of  the  moderate  investor  is  that  it  is  very  easy 
for  the  sake  of  a  fair  amount  of  interest  to  lose  the  principal.  There  is  no 
need  of  this.  By  studying  out  the  vital  question  of  the  life  of  a  mine 
with  its  concurrent  rate  of  amortization,  and  by  steadily  refusing  to 
believe  that  the  current  construction  is  "capital,"  one  may  eliminate 
overvalued  properties  pretty  rapidly.  It  is  a  good  rule  not  to  buy  stocks 
in  concerns  that  are  too  wise  to  issue  full  reports.  If  there  is  any 
business  in  the  world  where  a  full  knowledge  of  certain  elemental  facts 
is  necessary  for  a  safe  and  sane  investment  it  is  surely  mining. 

Furthermore,  at  the  last  analysis  the  price  of  a  commodity  must  be 
governed  by  its  cost.  It  is  highly  important,  therefore,  to  know  when 
prices  are  excessive  and  therefore  unstable.  It  is  one  of  the  objects 
of  this  book  to  show  what  the  cost  of  production  on  a  grand  scale  in 
various  important  products  of  mines  really  is.  In  such  computations 
the  capital  charges  are  a  vital  factor  and  I  have  thought  it  desirable 
to  explain  as  fully  as  possible  my  conception  of  a  proper  treatment  of 
them  in  order  that  the  reader  may  be  able  to  judge  for  himself  the  justness 
of  my  conclusions. 

One  rather  curious  fact  should  be  borne  in  mind  i.e.,  that  depreciation  will  vary 
not  according  to  the  original  cost  of  a  plant  but  according  to  the  prevailing  level  of 
prices.  The  analogy  of  an  automobile  is  perhaps  clearer  to  the  average  person  than 
that  of  a  mine,  but  I  am  satisfied  that  it  is  as  true  for  the  latter  as  for  the  former 
Suppose  a  man  bought  an  automobile  in  1917  for  $2,000.  If  the  price  level  were  the 
same  he  might  have  sold  this  car  and  obtained  a  new  one  for  $1000  additional.  That 
would  have  been  his  depreciation.  But  in  1919  a  car  of  the  same  class  might  sell  for 
$3000 — and  his  first  car  might  have  value  in  proportion,  say  $1500.  But  his  depre- 
ciation would  be  $1500. 

Thus  in  many  cases  sums  set  aside  for  depreciation  in  pre-war  times  must  now  be 
insufficient. 


CHAPTER  VI 
COAL 

IMPORTANCE  OF  COAL — REMARKS  ON  ITS  ORIGIN — CYCLES  OF  GEOLOGIC  HISTORY — 
THE  PALEOZOIC  COAL  FIELDS — MESOZOIC — TERTIARY — STATISTICS  OF  COAL 
PRODUCTION. 

Modern  civilization  is  propelled  by  the  annual  combustion  of  upward 
of  1,500,000,000  short  tons  of  coal.  This  vast  use  of  power  other  than 
human  or  animal  muscle  is  the  basic  fact  in  the  mightiest  revolution  in 
industry,  in  art,  and  in  habits  that  the  human  race  ever  experienced. 
Every  time  we  press  a  button  to  turn  on  an  electric  light,  every  time  we 
enter  an  elevator  or  a  street  car,  we  participate  not  only  in  a  human  revo- 
lution, but  in  a  great  geologic  fact;  for  the  mining  and  destruction  of 
coal  removes  some  of  the  important  strata  of  the  earth's  crust. 

Coal  mining  is  the  basis  and  dependence  of  other  kinds  of  mining 
just  as  it  is  of  other  industries.  And  farther,  since  coal  mining  is  one 
of  the  simplest  and  commonest  of  mining  operations,  it  serves  as  a 
standard  by  which  the  complexity  and  cost  of  other  kinds  of  mining  may 
be  appraised. 

If  coal  were  not  so  abundant  and  widespread  its  use  could  not,  of 
course,  be  so  extensive  and  fundamental.  The  fact  of  its  wide  distribu- 
tion is  the  most  powerful  element  in  the  conduct  of  the  business.  If  coal 
were  not  cheap  it  could  not  be  so  extensively  used;  it  would  not,  there- 
fore, be  so  valuable.  But  because  it  is  cheap  it  is  often  wasted;  it  is  cheap 
because  it  can  be  offered  in  the  market  by  innumerable  competitors, 
whose  aim  is  not  the  wise  use  of  coal,  but  ready  money  profit  from  it. 
Hence  this  most  valuable  of  mineral  resources  has  been  in  considerable 
measure  crudely  and  greedily  exploited. 

The  subject  of  the  origin,  history  and  distribution  of  this  substance  is 
simple  enough  to  be  understood  easily  by  any  one  willing  to  give  it  at- 
tention; but  at  the  same  time  it  involves  facts  about  the  changes  that 
have  taken  place,  and  are  still  taking  place,  on  the  earth's  crust  that  are 
hard  to  grasp.  Coal  is  being  formed  at  the  present  day  in  immense 
quantities  over  immense  areas.  The  present  age  is  therefore  a  coal  form- 
ing age,  but  whether  conditions  are  favorable  for  burying  it  under 
accumulations  of  sediment  so  that  the  coal  now  being  formed  may  be 
preserved  indefinitely  in  the  earth's  crust,  and  whether  the  formation  of 
coal  is  more  general  in  this  age  then  in  past  geological  ages,  or  less  so, 
are  questions  not  so  easily  answered.  Coal  is  nothing  but  buried  peat; 

71 


72  THE  COST  OF  MINING 

coal  formations  are  nothing  more  than  a  series  of  swampy  land  surfaces 
that  were  finally  buried  in  a  variety  of  ways  under  sediments. 

People  living  in  certain  areas  of  the  Anglo  Saxon  world,  for  instance, 
those  of  the  southwestern  half  of  the  United  States,  of  the  whole  of  Aus- 
tralia and  South  Africa  may  never  have  seen  a  peat-bog  or  have  any 
clear  idea  of  what  it  is  like.  To  these  it  may  be  a  matter  of  surprise 
to  learn  that  the  natural  surface  of  the  earth  north  of  a  line  drawn  across 
North  America  from  Vancouver  Island  to  New  York  City,  and  across 
Europe  and  Asia  from  Paris  to  Moscow  to  Vladivostok,  is  occupied  to  a 
considerable  percentage  of  its  area  by  peat-bogs.  How  large  the  per- 
centage is  I  do  not  know:  to  find  out  would  be  a  question  of  mapping 
some  8  or  9  million  square  miles  of  land  in  a  solid  block  occupying  the 
sub-artic  and  north  temperate  zones  of  the  northern  hemisphere.  In 
all  this  vast  space,  wherever  the  climate  is  damp  enough  or  wherever 
the  low  lands  are  partially  flooded,  mosses  and  semi-aquatic  trees  like 
cedar,  tamarack  and  alder  spread  over  the  surface,  holding  and  absorb- 
ing water  like  a  sponge.  The  trees  and  plants  live  and  die  partially 
immersed  in  water.  When  they  fall  they  are  in  large  part  covered  with 
water  which  preserves  them  indefinitely  from  decay.  A  woody,  or  at 
least  a  vegetable,  mass  accumulates  for  ages  until  it  finally  forms 
a  muck  of  almost  indefinite  depth,  always  completely  saturated  with  water 
under  the  spongy  covering  of  moss.  The  moss  indeed  seems  like  a 
carpet  spread  over  the  surface  of  a  lake;  the  traveler  sinks  in  it  to  his 
knees,  and  while  he  sees  before  him  the  prospect  of  a  wide  plain  or  mea- 
dow he  finds  its  surface  trembling  under  his  footsteps  for  yards  around. 
If  he  has  the  bad  luck  to  step  into  a  water  hole,  or  break  through  the 
mossy  carpet,  he  instantly  mires  in  the  vegetable  coze  which  may  be  a 
hundred  feet  deep.  Such  are  the  " tundras"  of  Siberia  and  Alaska,  the 
"muskegs"  of  Canada,  the  "tamarack  swamps"  of  Michigan,  the  bogs 
of  Massachusetts  and  of  Ireland  and  the  marshes  of  Germany  and  Russia. 
I  am  sure  that  the  area  of  these  swamps  is  far  greater  than  that  of  all  the 
coal  fields  of  the  world  put  together.  The  vegetable  ooze  and  the  mat  of 
preserved  wood  is  peat.  It  is  incipient  coal.  It  constitutes  in  itself 
an  unspeakably  great  potential  fuel  supply,  at  present  only  casually 
used  because  it  cannot  compete  with  the  more  convenient  and  desirable 
fuels  that  may  be  cut  from  the  forest  or  dug  out  of  the  rocks. 

These  northern  marshes  are  not  the  only  places  where  peat  accumu- 
lates. The  cypress  swamps  of  Arkansas  and  Louisiana,  the  dismal 
swamp  of  Virginia,  the  mangrove  swamps  of  tropical  tide  flats  are  also 
receptacles  for  such  vegetable  ooze;  but  in  general  the  south  temperate 
and  tropical  zones  are  not  very  favorable  for  them.  The  hot  sun  quickly 
dries  up  a  swamp  unless  it  is  replenished  by  a  constant  supply  of  water. 
Even  an  occasional  drought  will  expose  the  vegetable  mass  to  rapid 
destruction  by  oxidation  or  rotting;  in  a  dry  climate  therefore,  or  in  one 


COAL  73 

in  which  the  rainy  seasons  alternate  with  prolonged  droughts  the  process 
is  impossible  except  under  very  unusual  circumstances.  That  is  why 
so  many  people  may  live  and  die  without  knowing  what  peat  is,  although 
it  is  really  so  abundant. 

The  mere  growth  of  peat  on  the  surface  does  not  lead  to  the  formation 
of  coal.  To  complete  the  process  it  is  necessary  to  bury  the  peat  under 
sediments.  The  conditions  that  favor  such  burying  are  not  by  any 
means  so  common  as  those  which  permit  of  the  accumulation  on  the  sur- 
face. Undoubtedly  most  of  the  peat  that  forms  is  eventually  destroyed 
again  without  ever  being  buried.  A  change  of  climate,  or  of  drainage, 
easily  puts  it  in  the  way  of  destruction. 

The  manner  in  which  peat  swamps  may  be  effectively  buried  is  well 
worth  a  moment's  consideration.  It  is  really  a  matter  of  common 
geography.  Every  school  boy  knows  about  the  dykes  of  Holland  and  the 
levees  of  New  Orleans;  that  these  dykes  are  to  protect  large  areas  from 
overflow  either  by  the  tide  or  by  the  river  floods  or  by  both.  Both  tracts 
are  in  the  deltas  of  large  rivers — the  Rhine  and  the  Mississippi.  When 
a  river  builds  a  delta  into  the  margin  of  the  ocean  it  raises  a  flat  pile  of 
mud  higher  and  higher  and  the  river  itself  debouches  right  on  top  of  the 
pile  and  usually  sends  its  waters  trickling  in  smaller  or  larger  streams 
down  the  sides  of  it  in  all  directions.  The  banks  of  the  main  river  and 
each  branch  are  invariably  higher  than  the  country  between  the  branches, 
at  least  they  become  so  sooner  or  later.  Eventually  a  stream  will  break 
through  one  of  these  banks  and  start  a  new  channel  in  the  hollow  between 
old  channels  and  eventually  fill  it  up  with  silt  higher  than  the  old  channels 
which  in  their  turn  become  low  ground.  Suppose  such  hollows  were 
filled  with  peat  swamps;  these  swamps  would  sooner  or  later  be  covered 
by  the  river  muds  and  the  peat  would  become  a  coal  bed.  The  Rhine 
delta  is  actually  in  a  peat  forming  climate  today  and  if  it  were  not  for  the 
interference  of  civilization  nearly  the  whole  of  Holland  and  a  good  part 
of  Belgium  and  Friesland  would  be  a  coal  forming  region  on  no  mean  scale. 
All  that  would  be  necessary  would  be  the  continuance  of  the  present 
climate  and  a  maintenance  of  the  present  sea  level;  or,  better  still,  a  slow 
substance  of  the  delta  at  approximately  the  rate  at  which  the  river  can 
fill  it  up.  The  peat  swamps  might  grow  deeper  indefinitely  always 
keeping  their  surface  up  to  the  level,  or  slightly  above  the  level,  of  the 
river  channels,  thus  helping  to  maintain  these  channels  for  long  periods. 
In  this  manner  the  rivers  would  slowly  build  their  beds  and  banks  higher 
and  higher,  and  build  out  deltas  further  and  further.  The  waves  and 
shore  currents  would  spread  the  mud  in  bars  and  beaches  along  the 
shores  of  the  delta  and  enable  the  beaches  to  creep  further  out  into  the  sea. 
As  they  crept  out  the  peat  bogs  would  follow  them.  Thus  the  whole 
area  of  the  delta  between  the  river  channels  and  the  sea  beaches  would 
be  filled  with  enormous  accumulations  of  peat  interrupted,  of  course,  by 


74  THE  COST  OF  MINING 

occasional  patches  where  overflows  would  pour  in  mud,  by  other  patches 
where  the  water  would  become  too  deep  for  the  swamp  plants  and  thus 
make  lakes,  or  by  sand  dunes  blown  up  from  the  beaches.  If  the  sub- 
sidence of  the  delta  should  become  too  rapid  for  the  river  to  maintain  it 
the  sea  would  finally  break  through  the  beaches  and  begin  flooding  the 
swamps  with  salt  water,  killing  the  growth  and  immediately  commence 
to  cover  the  peat  with  beach  sands  and  sediments.  The  shallow  bottoms 
of  the  bays  would  be  occupied  by  marine  animals  and  plants:  if  the 
water  were  not  muddied  by  a  constant  supply  of  fresh  silt,  a  limestone 
might  be  deposited  instead  of  mud.  Still  further  a  portion  of  the  peat 
bogs  might  be  rapidly  covered  by  a  march  of  sand  dunes  blown  from  the 
beaches. 

Thus  in  the  case  of  a  large  river  delta  in  a  damp,  cool  climate  we  can 
see  how  there  might  be  very  deep  and  very  extensive  deposits  of  peat  and 
how  these  deposits  would,  in  the  course  of  time,  under  stable  conditions 
be  covered  either  by  river  mud,  marine  sediments  or  by  wind-blown  sand. 
It  is  also  easy  to  see  how  a  whole  delta  might  be  covered  over  by  an  ac- 
celeration of  the  subsidence,  but  when  the  subsidence  ceased,  or  slowed 
up,  a  new  delta  would  form  right  on  top  of  the  old  one  and  as  it  grew  out 
would  cover  up  the  old  one  to  the  new  level  of  the  sea,  or  of  the  new  delta. 
New  peat  swamps  would  form  on  the  new  surface,  which,  by  the  way, 
would  also  extend  further  up  the  river  valley  and  back  over  the  lower 
slopes  near  the  shore.  Thus  the  process  would  go  on  until  some  radical 
change  in  the  earth's  crust  would  put  an  end  to  the  formation  of  the  delta, 
or  change  the  climate  so  that  peat  swamps  would  no  longer  grow. 

If  Louisiana  had  the  climate  of  Michigan  we  should  see  all  these 
operations  going  on  in  this  country  on  a  huge  scale.  From  Cairo, 
Illinois,  to  the  Gulf  and  for  vast  stretches  along  the  Gulf  in  Texas, 
Louisiana,  Mississippi,  Alabama  and  Florida  there  would  be  interminable 
peat  deposits,  all  in  process  of  gradual  burying  in  the  ways  I  have  indi- 
cated. So  far  as  I  can  see  such  deposits  might  easily  be  on  a  scale  equal 
to  anything  known  in  the  great  coal  beds  of  the  world.  For  instance  the 
Pittsburgh  coal  seam  is  believed  to  have  been  continuous  over  an  area 
of  10,000  square  miles.  It  is  reasonable  to  expect  that  with  no  change 
whatever  in  conditions  other  than  to  substitute  the  climate  of  the  Great 
Lakes  a  continuous  peat  swamp  would  form  on  the  Mississippi  Delta 
over  even  a  greater  area.  The  total  area  of  lowlands  in  which  swamp 
formation  would  be  continuous  and  active  must  be  more  than  100,000 
square  miles.  If  this  climate  and  these  conditions  were  to  continue 
indefinitely  and  if  the  weighting  of  the  delta  caused  a  slow  subsidence 
the  coal  forming  process  would  eventually  spread  over  an  immense  area. 
A  subsidence  of  500  feet,  an  extremely  moderate  earth  movement, 
geologically  speaking,  if  accomplished  slowly  would  cause  the  active 
delta  and  the  peat  forming  area  to  march  progressively  up  the  valleys 


COAL  75 

beyond  Kansas  City,  Chicago  and  Pittsburgh,  leaving  behind  in  the 
lower  basin  innumerable  deposits  of  peat  at  different  levels  covered  by  a 
deep  and  ever  deepening  mass  of  sediments.  Over  the  site  of  New 
Orleans  limestone  beds  would  now  be  forming  and  beneath  them  great 
coal  measures,  and  no  doubt  oil  and  gas  rocks  also,  would  be  securely 
locked.  Such  a  development  would  be  the  counterpart  of  the  great  coal 
formation  of  the  Carboniferous  period,  not,  of  course,  on  the  same  places 
but  on  an  equivalent  scale. 

This,  of  course,  is  only  a  rule  sketch  of  the  major  features  of  a  coal 
forming  period;  there  are  innumerable  variations  of  details  of  all  kinds; 
but  in  general  one  may  see  in  any  coal  mine  an  actual  record  of  just  such 
happenings.  I  have  said  that  any  observer  who  gives  the  matter  atten- 
tion can  readily  grasp  the  general  features  of  this  process;  but  there 
ought  perhaps  to  be  added  one  qualification,  or  explanation.  The  pro- 
cess of  giving  the  matter  attention  is  largely  that  of  dissociating  one's 
imagination  from  the  limitations  of  human  experience.  It  is  difficult  to 
picture  the  life  scale  of  the  earth  instead  of  the  life  scale  of  a  man.  A  gen- 
eration seems  a  pretty  full  cycle  and  it  is  hard  to  get  fully  away  from  that 
conception  of  time;  but  to  think  effectively  of  geological  processes  one 
must  banish  that  limitation  completely.  The  span  of  human  life  or  even 
the  whole  period  of  recorded  history  is  such  an  insignificant  fraction  of 
time  that  the  geological  processes  have  made  only  trivial  changes  in 
geography  during  the  whole  of  it.  A  coal  forming  epoch  such  as  I  have 
attempted  to  picture  must  be  measured  in  millions  of  years  rather  than 
in  thousands  and  yet  it  constitutes  only  a  modest  portion  of  geological 
history.  In  North  America  we  are  fortunate  enough  to  have  the  coal 
left,  and  remarkably  well  preserved  too,  by  three  such  general  coal 
forming  periods  all  on  a  truly  collossal  scale,  besides  several  others  of 
minor  importance.  The  publications  of  the  U.  S.  Geological  Survey 
and  of  many  of  the  State  surveys  are  full  of  information  about  all  this, 
a  bulk  of  literature  indeed  too  great  for  digestion,  but  for  a  general  view 
one  may  read  two  volumes,  Bulletin  No.  38  of  the  U.  S.  Bureau  of  Mines 
by  White  and  Thiessen,  and  Professional  Paper  100  A,  of  the  U.  S.  Geo- 
logical Survey  by  Marius  R.  Campbell,  on  the  Coal  Fields  of  the  United 
States.  Even  these  discussions  are  scarcely  adequate  for  they  deal 
only  with  this  country.  A  general  review  of  the  coal  resources  of  the 
World  was  made  by  the  International  Geological  Congress  at  the  Mon- 
treal meeting  in  1913.  These  publications  are  not  easily  had  by  the 
casual  reader.  Since  all  other  mining  is  very  largely  built  upon  coal  a 
comprehension  of  the  characteristics  and  location  of  the  principal  coal 
fields  is  necessary  for  an  understanding  of  the  economics  of  mining.  I 
am  attempting  to  give  in  a  few  further  paragraphs  some  further  generali- 
zations on  this  most  interesting  subject. 

" Technically  at  least"  says  David  White,  Chief  Geologist  of  the  U.  S. 


76  THE  COST  OF  MINING 

Geol.  Survey,  "coal  is  found  in  the  Ordovician  and  Cambrian,  and 
probably  even  in  the  pre-Cambrian  sedimentary  series,  where  it  is  now 
represented  by  bedded  graphite."  "  Well  developed  coal  has  been  found 
in  the  strata  of  every  period  since  the  Silurian."  "At  present  coal  is 
commercially  mined  (in  the  United  States)  from  rock  of  basal  Mississip- 
pian  (Lower  Carboniferous),  Pennsylvanian  (Upper  Carboniferous), 
Triassic,  Lower  Cretaceous,  Upper  Cretacceous  and  Tertiary  ages. 
Some  mining  for  fuel  has  been  done  in  the  Jurassic  of  Alaska."  Thus  the 
formation  of  coal  is  shown  to  be  one  of  the  regular  geological  processes 
and  it  has  gone  on  persistently  in  all  times  since  plant  life  has  existed  on 
the  globe.  But  it  is  only  occasionally  that  conditions  have  occurred 
favorable  to  the  preservation  by  burying  as  well  as  for  the  formation  of 
peat  on  a  grand  scale.  It  is  found  that  these  conditions  accompany 
cycles  of  world  history  which  have  repeated  themselves  in  general  terms 
though  not  in  precise  detail.  These  cycles  have  a  singular  bearing  on 
the  formation,  preservation  and  exposure  of  metal  deposits  also. 

While  it  is  a  little  far-fetched  to  assert  that  a  study  of  these  broad 
geologic  processes  has  an  intimate  bearing  on  the  practical  every  day 
pursuits  of  mining,  it  is  not  extravagant  to  say  that  it  is  important  to 
those  who  wish  to  have  a  rational  vision  of  economic  resources;  or  to 
expect  that  it  will  have  increasing  weight  in  future  explorations  for  min- 
erals. One  may  be  positive  that  with  industries  organizing  on  an  ever 
more  comprehensive  scale  and  governments  undertaking  projects  to 
harmonize  and  further  them  these  major  geologic  facts  will  have  some 
weight  in  the  locating  of  manufacturing  enterprises  and  of  trade  routes. 
At  any  rate  the  subject  is  interesting. 

A  century  ago  as  soon  as  the  observations  upon  the  earth's  crust  had 
become  extensive  enough  to  afford  a  basis  for  generalized  description, 
geologists  (mainly  English  at  that  time)  perceived  that  almost  everwhere 
the  sedimentary  rocks  were  separated  into  several  natural  groups  by 
abrupt  differences  of  sodidity  and  attitude.  The  older,  harder  and  more 
tilted  or  contorted  rocks  they  called  Primary,  an  intermediate  group  they 
called  Secondary,  and  the  more  recent  and  less  solidified  group  the  Ter- 
tiary. These  divisions  have  been  found  by  the  more  exhaustive  and 
far  reaching  researched  of  all  later  geologists  to  be  established  with  about 
the  same  definiteness  all  over  the  world.  Broader  and  more  detailed 
mapping  has  since  added  a  fourth  and  older  group  obscure  to  the  earlier 
geologists  because  less  generally  exposed,  but  now  established  with  the 
same  distinctness  as  the  others;  so  that  now  the  principal  sedimentary 
rocks  throughout  the  world  (omitting  the  recent  unconsolidated  materials 
called  the  Quaternary)  are  divided  into  four  great  groups  generally  named 
as  follows  : 

1.  The  Algonkian  or  Eozoic  containing  the  recognizable  earliest 
vestiges  of  life. 


COAL  77 

2.  The  Paleozoic,  or  Old  Life  group,  Primary 

3.  The  Mesozoic,  or  Middle  Life  group,  Secondary 

4.  The  Cenozoic,  or  Later  Life  group,  Tertiary 

It  must  be  borne  in  mind  that  these  divisions  are  not  in  the  least 
arbitrary  or  conventional  but  are  clearly  marked  by  nature.  Is  it  not 
remarkable  that  the  same  differences  should  appear  in  all  the  continents 
and  in  both  hemispheres?  What  has  mud  being  washed  down  into  a 
bay  in  Australia  to  do  with  mud  in  a  lake  in  Montana?  What  should  not 
the  entire  series  of  rocks  in  Australia  be  laid  down  without  any  refer- 
ence to  what  may  happen  in  Montana? 

It  appears  that  each  of  the  great  groups  of  stratified  rocks  represents 
a  cycle  of  world  history  in  which  conditions  were  comparatively  stable  and 
uniform.  This  does  not  mean  that  minor  and  differential  changes  did 
not  occur  during  and  throughout  these  periods;  the  sea  level  oscillated 
more  or  less  just  as  it  is  doing  at  this  moment,  the  processes  of  erosion 
brought  about  their  progressive  changes  at  all  times;  but  during  these 
periods  these  agencies  proceeded  along  the  same  general  lines  with  reg- 
ional or  local  instead  of  world  wide  interruptions.  In  general  the  progress 
was  toward  the  wearing  down  of  continental  masses,  the  filling  up  of 
depressions,  the  formation  of  vast  plains  and  the  development  of  equable 
climate  through  the  leveling  of  those  barriers,  such  as  lofty  mountain 
ridges,  which  cause  abrupt  changes. 

In  each  of  the  great  cycles  the  last  stage  was  the  one  favorable  to  the 
formation  of  coal  on  a  great  scale.  The  continents  were  not  only  worn 
down  pretty  flat  but  the  wearing  down  of  them  had  filled  up  the  conti- 
guous shallow  parts  of  the  ocean,  tending  to  raise  the  comparative  level 
of  the  sea.  Minor  oscillations  or  warpings  of  the  surface  would  thus 
flood  or  expose  large  areas  of  flat  lands.  The  climate  being  equable 
was  also  stable  for  long  periods  and  an  area  wet  enough  to  promote 
the  formation  of  peat  would  remain  so.  Thus  the  conditions,  briefly 
outlined  above  for  the  creation  of  extensive  coal  deposits  reached 
perfection. 

For  reasons  very  dimly,  or  not  at  all,  understood,  these  cycles  of 
quiescence  and  equilibrium  were  interrupted  finally  in  each  case  by 
world  wide  convulsive  movements  of  the  earth's  crust,  called  "  Revolu- 
tions." These  revolutions  were  not  cataclysms  in  the  sense  of  being 
sudden  and  overwhelming  disturbances,  although  they  were  sufficiently 
rapid  to  exterminate  innumerable  forms  of  life  and  to  produce  great 
changes  in  living  conditions  for  both  plants  and  animals.  There  were 
no  doubt  violent  earthquakes,  always  abundant  volcanic  activity;  but 
in  general  these  revolutions  were  progressive  and  differential.  The 
leveling  forces  were  overcome  by  the  forces  of  upheavel.  Great  mountain 
chains  and  plateaus  were  thrown  up,  frequently  new  ones,  the  continents 
in  general  were  raised  and  took  new  forms,  the  ocean  beds  were  deepened 


78  THE  COST  OF  MINING 

and  the  sea  level  retreated.  In  other  words  there  were  immense  changes 
of  geography  and  of  climate.  Thus  in  the  Southern  Hemisphere  at 
the  close  of  the  Paleozoic,  the  mild  climate  of  the  coal  forming  Carbon- 
iferous period  was  succeeded  by  a  formidable  refrigeration  so  that  in 
Permian  time  ice  fields  covered  portions  of  South  America,  Australia 
and  Africa  on  a  scale  exceeding  that  of  the  recent  glacial  period  of  the 
Northern  Hemisphere.  This  is  merely  an  example. 

The  revolution  having  worked  itself  out,  the  conditions  of  compara- 
tive equilibrium  returned,  the  erosive  forces  proceeded  again  with  the 
work  of  leveling  the  uplifted  continents;  in  short  a  new  cycle  parallel  to 
but  not  identical  with  the  old  one  was  under  way. 

The  major  coal  formations  were  therefore  laid  down  toward  the  end  of 
these  cycles  when  the  continents  were  maturely  eroded  and  flattened 
when  climate  was  equable  and  stable,  and  the  earth's  crust  free  from 
disturbance.  How  far  these  processes  were  carried  may  be  gathered  from 
a  paragraph  or  two  on  the  geography  of  the  principal  coal  formations  of 
North  America. 

1.  The  Paleozoic  coal  fields  extend  from  central  Oklahoma  to  Mass- 
achusetts, 1500  miles  in  a  straight  line,  and  from  Birmingham,  Alabama, 
to  Cedar  Rapids,  Iowa  in  greatest  breadth,  750  miles.  This  area  contains 
only  the  remains  of  the  original  deposits,  but  it  gives  some  idea  of  the 
huge  low  swampy  plains,  so  near  sea  level  that  they  were  repeatedly 
flooded  by  gentle  oscillations  of  the  level.  This  area  was  traversed 
by  rivers  which  in  all  probability  carried  more  water  than  the  Mississippi 
system  of  today.  In  fact  the  lowlands  alone,  those  subject  to  periodic 
or  occasional  overflow  by  the  rivers  or  the  sea,  amounted  to  1,000,000 
square  miles  in  a  solid  block. 

It  is  not  reasonable  to  suppose  that  this  great  tract  was  all  of  the  same 
level  or  that  coal  was  either  formed  or  buried  simultaneously  over  the 
whole  of  it;  rather  that  through  the  progressive  changes  of  sea  level  the 
whole  area  was  affected  by  delta  and  peat  forming  conditions  which  at  any 
given  time  would  form  a  broad  strip  immediately  back  of  the  sea-coast. 
The  actual  deltas  probably  extended  up  the  rivers  hundreds  of  miles, 
just  as  the  Mississippi  delta  of  today  extends  up  to  Cairo,  more  than 
500  miles  in  a  straight  line  from  the  mouth  of  the  river,  although  for  the 
greater  part  of  that  distance  the  delta  covers  only  a  strip  on  each  side 
side  of  the  river.  Whenever  the  sea  level  rose  those  delta  strips  would 
retreat  inland;  whenever  the  sea  level  retreated  the  deltas  would  advance. 
Such  oscillations  did  take  place,  but  on  the  whole  the  basin  was  subsiding, 
for  during  the  period  the  sediments,  containing  numerous  separate 
beds  of  coal  accumulated  to  a  depth  of  several  thousand  feet,  the  surface 
during  all  the  time  required  for  this  remaining  practically  at  sea  level, 
varying  from  one  or  two  hundred  feet  above  to  one  or  two  hundred 
feet  below.  To  get  an  accurate  idea  of  the  appearance  of  the  whole 


COAL  79 

country  within  the  area  mentioned,  one  needs  to  do  nothing  more  than 
to  take  a  look  at  an  uncleared  tract  near  New  Orleans.  The  plants 
were  actually  different  but  to  a  casual  observer  they  would  not  have 
appeared  so. 

As  to  the  geography  outside  of  this  plain  we  can  have  only  a  general 
idea.  Toward  the  north  there  was  a  large  area  of  higher  land  extending 
unbrokenly  from  central  Minnesota  to  Labrador  and  perhaps  beyond. 
To  the  southeast  in  Georgia,  South  Carolina,  North  Carolina  and  Virginia 
there  were,  no  doubt,  land  areas,  probably  large  islands  of  moderate 
elevation  and  maturely  eroded  surface.  Toward  the  west  a  shallow 
sea  of  clear  water  extended  from  central  Texas,  Oklahoma,  Kansas  and 
Nebraska.  To  say  that  this  sea  covered  the  Rocky  Mountains  is  in- 
accurate. There  were  no  Rocky  Mountains  to  cover.  There  had  been 
mountains  in  that  region  to  be  sure,  but  they  were  different  mountains 
entirely,  which  had  been  worn  down  to  a  plain  and  finally  immersed 
in  the  sea  we  are  talking  about.  Just  where  this  sea  ended  toward  the 
north  and  northwest  I  do  not  know,  but  it  certainly  covered  nearly  the 
whole  of  New  Mexico,  the  northern  part  of  Old  Mexico,  the  whole  of 
Arizona,  southern  California  and  Nevada,  and  most  of  Utah,  Colorado, 
Wyoming,  Montana,  and  South  Dakota. 

Such  was,  dimly,  the  Pennsylvanian  epoch  in  North  America  at  the 
close  of  Paleozoic  time.  Marius  R.  Campbell  estimates  that  the  remains 
of  the  coal  left  on  these  delta  plains  amounts  to  1,088,000,000,000  tons, 
a  trillion,  enough  to  maintain  the  total  present  output  of  the  United 
States  for  1500  years.  This  coal  is  all  of  good  quality  and  high  rank, 
varying  from  bituminous  to  anthracite.  This  tract  contains  more  coal 
by  far  than  the  whole  continent  of  Europe,  possibly  more  than  the  whole 
of  Asia. 

The  coal  fields  of  Europe  are  at  present  the  most  important,  economic- 
ally speaking,  outside  of  those  of  North  America.  The  most  valuable 
ones  were  formed  during  the  same  epoch  and  under  a  parallel  set  of 
conditions.  A  similar  delta  plain  extended  with  possible,  or  probable 
interruptions  from  Ireland  through  Great  Britain,  Germany,  Poland  and 
Russia  to  the  sea  of  Asov.  "The  number  of  workable  seams"  says 
Chamberlain  and  Saulsbury  ' '  is  large  in  many  places .  Thus  in  Westphalia 
the  number  of  workable  beds  is  said  to  be  90.  The  aggregate  (maximum) 
thickness  of  the  coal  in  Lancashire  is  150  feet,  and  in  Westphalia,  274 
feet.  Here  as  elsewhere,  beds  of  marine  origin  alternate  with  those 
which  were  deposited  on  land,  in  marshes,  etc." 

2.  But  in  North  America  it  is  quite  a  mistake  to  focus  attention  too 
exclusively  upon  the  Paleozoic  coalfields.  At  the  end  of  the  next,  or 
Mesozoic,  world  cycle,  in  Upper  Cretaceous  time,  there  was  a  still  greater 
coal  development.  We  might  repeat  almost  the  same  description  of 
continental  and  climatic  conditions  but  when  we  come  to  geography  we 


80  THE  COST  OF  MINING 

must  migrate.  An  immense,  flat,  subsiding  plain  so  near  sea  level  that 
it  was  repeatedly  flooded  with  sea  water,  extended  from  the  Gulf  of 
Mexico  to  the  Arctic  Ocean  right  over  where  now  are  the  highest 
mountains  and  plateaus  of  the  Rocky  Mountain  system.  The  plain 
terminated  in  higher  land  to  the  eastward  on  a  line  from  east  central 
Texas  to  Duluth  to  Winnipeg;  on  the  west  on  a  line  from  northwestern 
Arizona  through  western  Utah  and  southeastern  Idaho,  northwestern 
Montana  and  eastern  British  Columbia  toward  the  mouth  of  the  Mac- 
kenzie river.  This  great  plain  was,  therefore,  3500  miles  long  and  up 
to  1000  miles  wide.  How  much  of  it  was  generally  under  sea  water  and 
how  much  above  during  the  coal  forming  age  is  pretty  hard  to  say,  but 
it  contains  every  kind  of  sediment  in  great  volume,  shales,  limestones 
and  sandstones.  The  coal  seems  to  have  formed  principally  in  the  central 
portion  of  this  tract,  from  which  we  may  guess  that  in  this  area  the  erosion 
of  the  chief  land  areas  to  the  west  was  sufficient  to  keep  the  basin  nearly 
full  of  mud. 

Coal  was  formed  on  a  scale  quite  equal  to  that  of  the  Pennsylvanian 
time.  It  remains  now  in  New  Mexico,  Colorado,  Utah,  Wyoming,  and 
Montana.  Mr.  Campbell  estimates  the  amount  available  at  a  depth  of 
less  than  3000  feet  at  1400  billion  tons  of  coal  of  sub-bituminous  and 
bituminous  rank  with  some  anthracite.  Lying  at  a  depth  of  from  3000 
to  6000  feet  he  estimates  666  billion  tons  more,  so  that  the  Upper 
Cretaceous  has  left  us  a  total  of  over  two  million  million  tons  in  the 
United  States  alone.  Possibly  a  third  as  much  more  lies  in  Canada. 
Much  of  this  coal  is  of  excellent  quality  for  all  purposes,  including  large 
amounts  suitable  for  good  metallurgical  coke. 

3.  At  the  end  of  this  wonderful  period  another  world  "  revolu- 
tion" occurred,  or  perhaps  more  accurately,  began.  Great  geographical 
changes  took  place.  Australia  was  permanently  separated  from  Asia. 
In  North  America  the  great  Cretaceous  trough  began  to  split  from  end  to 
end  along  the  line  of  the  Front  Range  of  the  Rocky  Mountains,  where 
blocks  of  the  hard  underlying  rocks  were  pushed  up  through  the  Creta- 
ceous sediments  like  flat  irons  through  pan-cakes,  raising  portions  up  bodily 
and  crumpling  other  portions  along  their  flanks.  The  process  of  slow 
subsidence  was  thus  reversed  and  the  great  trough  humped  up  in  the 
middle  so  that  the  whole  became  rather  a  plateau,  the  eastern  half  left 
undisturbed  other  than  by  a  gentle  tilting  which  made  a  wide  slope  of  the 
Great  Plains,  the  western  edge  of  which  are  in  places  nearly  8000  feet 
above  sea  level.  The  western  half  became  an  area  of  mountains  and 
plateaus  in  which  the  strata  are  generally  disturbed  and  exposed  by  fault- 
ing and  folding,  and  intruded  by  volcanic  rocks,  some  of  which  are 
enormous  batholiths. 

But  while  this  post-Cretaceous  change  was  extensive  enough  at  once 
to  produce  an  abrupt  unconformity  between  those  rocks  and  the  succeed- 


COAL  81 

ing  Tertiary  formations,  it  was  not  extensive  enough  at  first  greatly  to 
change  the  climate.  Portions  of  the  great  trough  remained  lowlands  and 
were  partially  filled  by  fresh  water  lakes  along  which  coal  formation 
continued.  The  largest  of  these  areas  was  in  North  Dakota,  Montana, 
and  Alberta,  where  the  deposits  were  on  a  truly  imposing  scale.  But 
these  coals  were  never  deeply  covered  by  sediments,  nor  have  they  been 
affected  by  earth  movements  such  as  would  compress  and  alter  them. 
They  are  therefore  still  lignites,  the  first  stage  removed  from  peat,  and  are 
coals  of  low  rank  and  poor  quality.  They  would  be  in  other  countries, 
however,  a  wonderful  fuel  supply.  Mr.  Campbell  estimates  in  this  field 
965  billion  tons  in  the  United  States  alone,  much  of  it  occurring  in  thick 
seams.  While  this  lignite  will  not  make  metallurgical  coke  it  will  make 
gas  and  power.  It  will  not  stand  transportation  or  storage  very  well, 
but  it  can  be  used  on  the  ground  for  electrical  generation,  whenever  a 
demand  shall  rise  for  it,  to  good  advantage. 

But  with  this  exception  the  Tertiary  coals  were  formed  in  smaller 
detached  lake  basins,  or  in  isolated  tracts  along  the  coasts.  They  occur 
in  Alabama,  Mississippi,  Tennessee,  Arkansas,  Louisiana,  Texas,  Cali- 
fornia, Oregon,  and  Washington.  The  aggregate  amount  in  these  fields 
is  great,  but  in  all  the  Southern  States  the  coal  lies  in  unconsolidated 
sediments  and  is  a  soft  low  grade  lignite.  It  is  only  in  the  state  of  Wash- 
ington that  a  large  Tertiary  field  has  been  so  affected  by  earth  movements 
as  to  reach  bituminous  and  sub-bituminous  rank.  Owing  to  its  position 
on  the  great  harbor  of  Puget  Sound  and  to  the  general  scarcity  of  coal 
along  the  Pacific,  this  is  apparently  a  field  of  marked  economic  importance. 
Mr.  Campbell  estimates  for  it  some  65  billion  tons  of  which  probably 
about  80,000,000  tons  have  been  mined. 

STATISTICS  OF  COAL  PRODUCTION 

GROWTH  OF  THE  COAL  INDUSTRY  IN  THE  UNITED  STATES — PRODUCTION  OF  THE 
DIFFERENT  STATES — TOTAL  PRODUCTION  TO  END  OF  1917 — PRICES  OF  COAL — 
COAL  RESOURCES  OF  THE  COUNTRY — COAL  PRODUCTION  OF  THE  WORLD. 

The  following  discussion  on  the  production,  growth,  prices,  and 
resources  of  the  coal-mining  industry  of  the  United  States  is  taken, 
with  a  few  comments,  from  the  pamphlet  issued  by  the  United  States 
Geological  Survey  on  the  Production  of  Coal  in  1917.  It  is  not  likely 
that  any  other  statement  to  be  had  gives  a  truer  perspective  of  the  es- 
sential features  of  this  business,  which  may  justly  be  said  to  be  one  of 
the  great  fundamental  elements  of  the  prosperity  of  the  nation.  Nothing 
can  be  more  important  than  that  the  public  at  large  shall  be  acquainted 
with  the  real  condition  of  this  industry,  for  it  is  not  unlikely  that  good 
public  policy  will  require  some  changes  in  the  conduct  of  it,  and  without 
the  support  of  public  opinion  nothing  beneficial  can  be  done. 


82  THE  COST  OF  MINING 

COAL  STATISTICS 

"The  production  in  1917  of  551,791,000  net  tons  of  bituminous  coal  and  of 
99,612,000  net  tons  of  Pennsylvania  anthracite  established  new  high  records  in 
both  industries.  The  increase  in  the  production  of  bituminous  coal  over  1916 
was  49,271,000  tons,  or  9.8  per  cent.,  and  in  anthracite  it  was  12,033,000  net  tons, 
or  13.7  per  cent.  For  bituminous  coal  1917  marks  the  third  successive  year 
of  increase  following  the  depression  of  1914;  for  anthracite  it  marks  the  first 
increase  following  three  years  of  decreasing  output  after  the  previous  high  record 
of  1913.  During  the  past  several  years  the  development  of  the  anthracite  indus- 
try has  in  no  way  kept  pace  with  that  of  bituminous  coal.  In  28  years  the  pro- 
duction of  anthracite  slightly  more  than  doubled;  that  of  bituminous  coal 
increased  fourfold.  The  reason  for  this  discrepancy  is  found  primarily  in  the 
limited  reserves  of  anthracite  as  compared  with  the  almost  boundless  resources 
of  bituminous  coal,  but  is  also  lies  in  the  fact  that  anthracite  is  essentially  a 
domestic  fuel  whose  production  has  followed  more  closely  the  increase  in  popu- 
lation, whereas  bituminous  coal  is  the  fuel  of  industry  and  has  kept  pace  with 
industrial  expansion  in  the  country.  Furthermore,  the  yearly  variations  in  the 
production  of  anthracite  are  largely  the  result  of  weather  conditions;  but  the 
yearly  variations  in  the  production  of  bituminous  coal  follow  the  curve  of  in- 
dustrial expansion  and  depression. 

The  following  discussion,  retained  from  the  first  edition  gives  a 
perspective  of  the  growth  of  this  industry. 

"The  combined  production  of  anthracite  and  bituminous  coal  in  the  United 
States  in  1907  amounted  to  a  little  more  than  480,360,000  short  tons. 

"With  an  average  of  30  cars  of  coal  to  the  train,  and  of  50  tons  to  the  car,  the 
number  of  trains  required  to  transport  this  product  was  320,300,  and  the  combined 
length  of  these  trains  would  extend  two  and  two-thirds  times  around  the  world 
at  the  equator.  The  hole  left  in  the  ground  by  the  extraction  of  this  fuel  is  equal 
to  17,585,000,000  cu.  ft.,  and  if  the  entire  quantity  of  coal  extracted  were  built 
into  one  cube,  it  would  have  the  dimensions  of  2605  ft.,  or  nearly  half  a  mile  on 
each  edge.  A  rectangular  column  with  a  1000-ft.  base  to  represent  the  coal  pro- 
duction of  the  United  States  in  1907  would  extend  nearly  3.4  miles  into  the  air." 

"An  interesting  fact  presented  by  the  statistics  of  the  production  of  coal  in 
the  United  States  is  that  in  each  decade  the  output  has  been  practically  doubled. 
Up  to  the  close  of  1865  the  total  production  had  amounted  to  284,890,055  tons. 
In  the  decade  from  1866  to  1875,  inclusive,  the  production  amounted  to  419,425,- 
104  tons,  making  the  total  production  up  to  the  close  of  1875,  704,315,159  tons. 
In  the  following  decade,  from  1876  to  1885,  inclusive,  the  production  amounted 
to  847,760,319  tons,  something  more  than  double  the  total  production  up  to  the 
beginning  of  that  decade.  At  the  close  of  1885  the  total  production  amounted 
to  1,552,075,487  tons  and  the  production  for  the  10  years  ending  with  1895 
was  1,586,098,641  tons,  and  the  total  production  at  the  close  of  1895  amounted 
to  3,138,174,119  short  tons.  In  the  decade  ending  December  31,  1905,  the  total 
production  amounted  to  2,832,402,746  short  tons,  and  the  grand  total  from  the 
beginning  of  coal  mining  amounted  to  5,970,576,865  short  tons.  The  average 
annual  production  from  1896  to  1905  was  283,240,275  short  tons,  compared  with 
which  the  average  production  in  1906  and  1907  (447,260,351  short  tons)  shows 
an  increase  of  164,020,076  tons,  or  58  per  cent. 

This  great  increase  in  the  production  of  coal,  when  considered  with  the  in- 


COAL  83 

crease  in  the  population,  furnishes  some  further  interesting  comparisons.  Going 
back  for  a  period  of  a  little  over  50  years,  or  to  the  middle  of  the  last  century,  and 
comparing  the  statistics  of  coal  production  with  the  increased  population,  it  is 
found  that  in  1850,  according  to  the  United  States  census  for  that  year,  the  pro- 
duction of  coal  amounted  to  6,445,681  tons,  when  the  population  of  the  country 
amounted  to  23,191,876  persons.  The  per  capita  production  of  coal  in  that  year 
is  thus  seen  to  have  been  0.278  ton.  In  1860,  or  10  years  later,  the  population 
was  31,443,321  persons,  and  the  coal  production  amounted  to  16,139,736  tons,  or 
an  average  of  0.514  ton  per  person.  At  the  census  of  1870  the  population  of  the 
United  States  amounted  to  38,558,371 ;  the  coal  production  in  that  year  amounted 
to  36,806,560  short  tons,  a  per  capita  average  of  0.96  ton.  Ten  years  later,  when 
the  population  was  50,189,209,  the  coal  output  amounted  to  76,157,944  short 
tons,  or  1.52  tons  per  capita.  In  1890  the  population  had  grown  to  63,069,756, 
an  increase  of  25  per  cent,  over  1880,  while  the  coal  production  had  grown  to 
157,770,963  short  tons,  or  a  per  capita  output  of  2.52  tons.  At  the  taking  of  the 
Twelfth  Census,  in  1900,  the  increase  in  population  amounted  to  22  per  cent., 
the  total  number  of  persons  reported  being  76,303,387,  while  more  than  70  per 
cent,  had  been  added  to  the  coal  production,  with  a  total  of  269,684,027  short 
tons,  or  an  average  of  3.53  tons  for  each  inhabitant.  In  other  words,  while  the 
population  from  1850  to  1900  showed  an  increase  of  230  per  cent,  the  production 
of  coal  increased  4084  per  cent.  The  Director  of  the  Bureau  of  the  Census, 
Hon.  S.  N.  D.  North,  estimates  the  population  of  the  United  States  on  June  1, 
1907,  at  about  85,500,000  persons,  making  the  per  capita  production  in  that  year 
5.6  tons;  that  is,  in  less  than  60  years  the  per  capita  production  of  coal  in  this 
country  has  increased  from  a  little  more  than  a  quarter  of  a  ton  to  5%  tons.  It 
is  true  that  in  the  earlier  years  the  proportion  of  wood  used  for  fuel  was  larger 
than  it  is  to-day,  but  the  actual  consumption  of  wood  at  this  time  is  little,  if 
any,  less  than  it  was  50  years  ago,  and  is  probably  greater.  It  must  also  be  re- 
membered that  in  addition  to  the  great  increase  in  the  consumption  of  coal 
per  head  of  population  there  has  been  a  great  increase  in  the  use  of  oil  for  fuel 
purposes,  while  natural  gas  still  remains  an  important  factor  in  this  regard. 

"The  total  number  of  men  employed  in  the  coal  mines  of  the  United  States 
in  1907  was  680,492,  against  640,780  in  1906  and  626,035  in  1905.  Of  the  total 
number  of  men  who  were  employed  in  1907,  167,234  were  employed  in  the  an- 
thracite mines  of  Pennsylvania,  while  the  bituminous  and  lignite  mines  gave 
employment  to  513,258  men.  In  1906  the  anthracite  mines  gave  employment 
to  162,355  men  and  in  1905  to  165,406  men.  The  bituminous  workers  numbered 
478,425  in  1906  and  460,629  in  1905.  The  average  number  of  days  worked  in 
the  anthracite  region  in  1907  was  220,  against  an  average  of  195  in  1906  and  215 
in  1905.  The  bituminous  mines  worked  an  average  of  234  days  in  1907,  213 
days  in  1906,  and  211  days  in  1905. 

The  foregoing  statements  were  written  in  1908  but  they  convey  the 
essential  facts  as  well  as  if  they  were  written  in  1919.  The  tables  of 
production  are,  however,  changed  to  show  the  figures  for  more  recent 
years.  Some  remarks  may  be  of  interest. 

It  appears  that  while  the  production  of  coal  per  capita  is  still  increas- 
ing in  this  country,  it  is  not  doing  so  at  the  former  rate.  The  increase 
between  1897  and  1907  was  from  about  2.77  tons  per  capita  to  about  5.6 


84 


THE  COST  OF  MINING 


tons  per  capita;  from  1907  to  1917  the  increase  was  only  from  5.6  to  6.5, 
It  might  appear  from  this  that  the  desire  of  the  population  for  fuel  is 
nearly  satisfied.  We  may  reckon  with  certainty  that  a  time  will  come 
when  the  consumption  of  coal  will  increase  only  in  proportion  to  the 
increase  of  population. 

The  same  facts  are  shown  by  the  total  output  of  the  country  to  date. 
It  will  be  remembered  that  up  to  1907  the  production  was  doubling  each 
decade  so  that  between  1897  and  that  year  it  was  nearly  equal  to  the 
entire  production  of  the  country  previous  to  1907.  From  1907  to  1917 
the  production  was  only  75  per  cent,  of  the  previous  production. 

Still  more  noticeable  is  the  failure  of  the  number  of  men  employed  in 
coal  mining  to  increase  at  the  former  rate.  In  1897  the  number  was  397,- 
000;  in  1907  it  was  680,000,  an  increase  of  283,000  for  the  decade;  but  in 
1917  the  number  had  risen  only  to  750,000,  an  increase  of  only  70,000  foi 
the  decade. 

The  statistics  show  a  remarkable  uniformity  of  conditions  in  the  coal 

industry  up  to  the  end  of  1915.     In  that  year  the  value  of  all  coal  at  the 

mines  was  estimated  by  the  U.  S.  Geological  Survey  at  $1.29  per  ton, 

almost  exactly  the  same  as  shown  by  the  tables  for  the  years  1903-1907 

THE  WORLD'S  PRODUCTION  OF  COAL  IN  SHORT  TONS 


Country 

1914 

1915 

1916 

1917 

1918 

United  States  
Canada  
Chile  

513,525,477 
13,594,984 
1,198,000 
312,897 
(d)53,396,400 
18,423,897 
33,360,885 
270,594,952 
297,698,617 
2,160,543 
861,265 
36,414,560 
4,897,360 
404,143 
(a)10,199,200 
440,905 
18,430,974 
608,660 
21,700,572 
9,461,674 
391,394 
11,663,865 
2,548,664 
1,180,825 
68,130 
357,515 
691,640 

531,619,487 
13,269,023 
1,291,000 
318,563 
(d)52,679,712 
15,627,858 
19,908,892 
259,139,786 
283,570,560 
2,534,284 
1,042,748 
31,158,400 
5,414,475 
454,432 
(0)19,800,000 
485,158 
19,156,404 
708,000 
22,596,750 
9,275,083 
458,934 
10,582,889 
2,208,624 
1,147,186 
66,000 
321,066 
588,104 

590,098,175 
14,461,678 
1,563,000 
357,346 
50,801,602 
16,458,816 
23,670,000 
272,099,000 
287,110,153 
2,879,000 
1,439,538 
28,962,724 
6,055,727 
457,262 
(a)24,000,000 
539,816 
19,324,826 
(o)856,000 
22,189,969 
11,208,400 
491,532 
1,262,420 
2,527,991 
1,016,654 
62,244 
337,709 
463,074 

651,402,374 
14,046,759 

396,132 
42,278,850 
18,587,942 
31,847,000 
(c)281,429,000 
278,319,149 
3,370,000 
1,898,334 
(0)30,047,000 
6,261,124 
487,914 

(a)910,000 
20,398,468 

29,220,897 
11,628,870 
614,856 
9,288,011 
2,316,629 
1,174,290 
71,021 

678,211,90' 
14,979,21, 

35,738,08 
15,308,30 
30,864,00* 
273,930,00( 
255,040,32* 
5,277,81, 
2,393,53 

7,897,31 

445,87' 

(a)  1,000,00( 
23,209,10 

(a)  30,600,001 
11,937,68: 
550,24, 
10,160,00( 

1,  101,171 
67,38 

Peru 

Austria-Hungary.  . 
Belgium 

France 

Germany. 

Great  Britain  
Holland  
Italy  

Russia  
Spain  
Sweden  

China 

Dutch  East  Indies 
India  
Indo-China  

Japan  
Union  of  So.  Africa 
Rhodesia  
New  South  Wales. 
New  Zealand  
Queensland  
Tasmania  
Western  Australia 
Victoria  

Total  

(c)  1,332,000,000 

(c)l,312,000,000 

(c)  1,401,000,000 

(c)l,476,000,000 

(a)  1,468,000,00 

(o)  Estimated,     (c)  Approximate,      (d)  Hungarian  production  estimated  at  10,000,000  short  tons 
NOTE. — This  table  is  based  on  a  compilation  of  the  U.  S.  Geological  Survey,  supplemented  by  som< 

later  statistics.     Most  of  the  figures  given  are  obtained  from  other  sources  and  represent  the  bes 

information  available  at  this  writing. 


COAL 
PRODUCTION  OF  COAL  IN  THE  UNITED  STATES  IN  SHORT  TONS 


85 


] 

916 

1917 

1918 

Quantity 

Total  value 

Quantity 

Total  value 

Quantity  (e) 

Alabama  

18,086,197 

$24,859,831 

20,068,074 

$45,616,992 

21  280000 

Alaska 

13,073 

52,317 

53  955 

265  317 

70  000 

1,994,915 

3,836,845 

2  143  579 

5  492  777 

2  228  000 

California  and  Idaho 

7,240 

15,367 

6,423 

14  791 

6  000 

Colorado                            .  .    .  . 

10,484,227 

16,964,104 

12,483,336 

27  669  129 

12  485  000 

Georgia  
Illinois  
Indiana  
Iowa  

173,554 
66,195,336 
20,093,528 
7,260,800 

310,093 
82,457,954 
25,507,246 
13,530,383 

119,028 
86,199,387 
26,539,329 
9,965,830 

301,391 
162,281,822 
52,940,106 
21,096,408 

101,000 
91,263,000 
27,325,000 
8,240,000 

Kansas 

6,881,455 

12,252,723 

7,184,975 

16,618  277 

7  292  000 

Kentucky 

25,393,997 

30,193,047 

27,807,971 

60,297  653 

29,690  000 

Maryland 

4,460,046 

6,947,623 

4,745,924 

11,667,852 

4,759,000 

Michigan 

1,180,360 

2,653,182 

1,374,805 

4,426,314 

1,385,000 

Missouri. 

4,742,146 

9,044,505 

5,670,549 

13,755,864 

5,605,000 

Montana  
New  Mexico  
North  Dakota  
Ohio.  

3,632,527 
3,793,011 
644,912 
34,728,129 

6,286,197 
5,580,369 
946,082 
40,150,907 

4,226,689 
4,000,527 
790,548 
40,748,734 

8,919,136 
7,455,166 
1,425,750 
100,897,148 

4,276,000 
4,241,000 
813,000 
46,464,000 

Oklahoma 

3,608,011 

7,525,427 

4,386,844 

12,335,413 

4,785,000 

Oregon 

42,592 

113,976 

28,327 

95,663 

39,000 

Pennsylvania,  bituminous... 
South  Dakota 

170,295,423 

8,886 

221,685,175 
18,021 

172,448,142 
8,042 

421,268,808 
23,346 

183,712,000 
7,000 

Tennessee 

6,137,449 

7,522,445 

6,194,221 

13,592,998 

6,916,000 

Texas  
Utah  
Virginia  

1,987,503 
3,567,428 
9,707,474 

3,092,663 
5,795,944 
10,261,424 

2,335,815 
4,125,230 
10,087,091 

4,177,608 
8,531,382 
20,125,713 

2,260,000 
5,535,000 
10,100,000 

Washington  
West  Virginia 

3,038,588 
86,460,127 

6,907,428 
102,366,092 

4,009,902 
86,441,667 

10,727,362 
200,659,368 

4,056,000 
91,350,000 

Wyoming  

7,910,647 

12,239,707 

8,575,619 

16,593,283 

9,600,000 

Total  bituminous  
Pennsylvania,  anthracite.  .  .  . 
Grand  total  

502,519,682 
87,578,493 
590,098,175 

665,116,077 
202,009,561 
876,125,628 

551,790,563 
99,611,811 
651,402,374 

1,249,272,837 
283,650,723 
1,532,923,560 

585,883,000 
98,826,000 
684,709,000 

(e)  Estimated. 


86 


THE  COST  OF  MINING 


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11 

11 

H'| 
I 


COAL  87 

"The  increase  in  production  in  1917  compared  with  1916  was  not  shared 
equally  by  all  producing  fields.  The  increase  was  mainly  in  the  fields  west  of 
the  Pennsylvania-Ohio  State  line.  The  only  States  to  record  decreases  were 
Georgia,  Oregon,  South  Dakota,  and  West  Virginia,  all  of  which,  with  the  ex- 
ception of  West  Virginia,  are  of  minor  importance.  The  largest  and  most  signifi- 
cant increases  were  in  Illinois,  30  per  cent.;  Indiana,  32  per  cent.;  and  Ohio,  17 
per  cent. 

"  There  were  no  changes  in  the  rank  of  the  larger  coal-producing  States  in 
1917.  Iowa  and  Wyoming  exchanged  positions,  Iowa  leading  Wyoming  in 
1917.  New  Mexico  dropped  back  from  sixteenth  place  in  1916  to  twentieth 
place  in  1917;  Alaska  from  twenty-eighth,  or  lowest  position,  in  1915,  rose  in 
two  years  to  twenty-sixth  place. 

"Abundant  and  efficient  labor  is  essential  to  the  maximum  production  of 
coal.  For  the  country  as  a  whole  the  average  output  per  man  per  day  has  not 
yet  reached  4  net  tons  of  bituminous  coal,  and  of  anthracite  an  average  output 
of  2.50  net  tons  per  man  per  day  has  been  recorded  in  only  one  year  in  the  last 
seventeen.  To  obtain  the  enormous  total  of  651,400,000  tons  of  coal  in  1917 
more  than  757,000  men,  not  including  coke  workers  and  office  force,  were  em- 
ployed in  and  about  the  mines,  a  record  exceeded  in  only  one  previous  year, 
1914,  when  the  total  was  763,185  men. 

"Considered  separately,  the  bituminous  and  anthracite  industries  presented 
contrasting  conditions  in  1917.  The  supply  of  labor  in  the  bituminous  fields 
was  the  largest  recorded — 603,000  men — a  substantial  increase  compared  with 
561,100  in  1916  and  583,500  in  1914.  In  the  anthracite  regions  the  number  of 
men  employed  was  154,174,  compared  with  159,869  in  1916,  and  was  the  lowest 
number  recorded  since  1903. 

"The  most  striking  feature  presented  by  the  statistics  of  labor  for  1917  is  the 
relatively  larger  increase  in  the  number  of  outside  or  surface  employees  in  com- 
parison with  the  underground  labor  in  both  bituminous  and  anthracite  mining. 
In  the  bituminous  mines  the  increase  in  the  total  men  employed  was  7.5  per  cent.; 
the  underground  employees,  representing  79  per  cent,  of  the  total  in  1917, 
increased  only  5  per  cent.,  compared  with  1916,  whereas  the  surface  labor  in- 
creased 21  per  cent.  The  same  was  true  in  the  anthracite  mines,  for  although 
the  total  number  of  men  decreased  3.6  per  cent.,  inside  labor  decreased  5.7  per 
cent,  and  outside  labor  increased  2.3  per  cent. 

"The  reason  for  this  difference  is  found  both  in  the  circumstances  surrounding 
the  labor  market  and  in  the  greatly  increased  demand  for  coal  that  prevailed 
in  1917.  The  demand  for  coal  was  so  great  and  the  prevailing  market  price  of 
coal  so  good  that  operators  exerted  every  effort  to  increase  their  capacity  and 
output.  The  most  certain  way  to  increase  capacity  is  to  put  on  more  men,  and, 
as  experienced  inside  men  were  more  difficult  to  obtain  than  day  laborers,  the 
outside  force  was  augmented  more  rapidly  and  out  of  proportion  to  the  normal 
requirements.  Under  the  pressure  from  increased  output  the  operators,  appar- 
ently without  regard  to  its  effect  in  costs,  added  labor  of  any  description. 

"In  the  coal  industry  the  productive  labor  is  that  done  underground.  Except 
for  very  small  percentage  of  the  output  obtained  from  steam-shovel  pits,  the  coal 
is  produced  by  the  men  inside.  The  average  output  per  man  per  day  (all  labor 
considered)  in  1917  was  3.77  tons  of  bituminous  coal,  a  decrease  of  3.3  per  cent, 
from  3.90  tons  in  1916.  If  the  largely  increased  number  of  total  men  in  1917 


88 


THE  COST  OF  MINING 


had  worked  no  more  days  in  1917  than  were  worked  in  1916  they  would  have  pro- 
duced, at  the  average  daily  rate  per  man,  nearly  30,000,000  tons  of  bituminous 
coal  less  than  they  did.  In  other  words,  the  decrease  in  the  average  effective- 
ness of  bituminous  mine  labor  in  1917  largely  offset  the  increase  in  the  supply  of 
labor,  and  the  large  gain  in  output  was  the  result  of  the  greater  number  of  days 
worked.  Stated  in  another  way,  7.5  per  cent,  more  men  working  5.7  per  cent, 
more  days  produced  in  1917  only  10  per  cent,  more  coal,  because  they  were  only 
97  per  cent,  as  effective  as  in  1916. 

"The  record  for  the  anthracite  industry  contrasted  with  that  of  the  bituminous 
industry  shows  a  decrease  in  men  but  an  increase  in  average  daily  output  from 
2.16  to  2.27  net  tons,  or  5  per  cent.,  a  record  not  equaled  or  exceeded  since  1908. 
The  anthracite  mines,  not  hampered  like  the  bituminous  mines  by  lack  of  cars, 
were  worked  285  days  in  1917,  compared  with  253  days  in  1916,  230  days  in  1915, 
and  257  days  in  1913,  the  previous  high  record. 

AVERAGE  VALUE  PER  TON  OP  COAL  AT  THE  MINES  SINCE  1908 


State 

1908 

1909 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

1917 

Ad- 
vance 
in  1917 

Alabama  

$1.26 
(a) 
1.68 
63.19 
1.41 
1.38 
4.02 
1.05 
1.06 
1.63 
1.49 
1.01 
1.17 
1.81 
1.64 
1.96 
1.37 
1.63 
1.06 
2.03 
2.74 

1.01 

1.15 
1.80 
1.68 
.91 
2.21 
.95 
1.62 

$1.19 
(a) 
1.48 
2.21 
1.33 
1.41 
4.27 
.05 
.02 
.65 
.44 
.94 
.11 
.79 
.65 
.97 
.29 
.56 
.99 
2.00 
2.69 

.94 

$1.25 
(a) 
1.56 
62.74 
.42 
.46 
.92 
.14 
.13 
.75 
.16 
.99 
.12 
.91 
.79 
.82 
.39 
.49 
1.05 
2.22 
3.48 

1.02 

$1.27 
(a) 
1.61 
62.00 
1.45 
dl.49 
/2.68 
1.11 
1.08 
1.73 
1.53 
.99 
1.11 
1.78 
1.72 
1.79 
1.44 
1.43 
1.03 
2.05 
2.32 

1.01 

$1.29 
(a) 
1.71 
2.33 
1.49 
dl.49 
/3.14 
1.17 
1.14 
1.80 
.62 
.02 
.18 
.99 
.76 
.82 
.42 
.53 
.07 
2.14 
2.60 

1.05 

$1.31 
(a) 
1.76 
63.54 
1.52 
1.41 
2.43 
1.14 
1.11 
1.79 
1.67 
1.05 
1.24 
1.99 
1.73 
1.74 
1.46 
1.52 
1.10 
2.05 
2.53 

1.11 
1.  96 
1.14 
1.77 
1.65 
1.01 
2.38 
1.01 
1.56 

$1.34 
(a) 
1.72 
c2.85 
1.66 
el.  44 
(c) 
1.12 
.10 
.79 
.64 
.02 
.27 
.99 
.73 
.75 
.61 
.52 
.13 
2.06 
2.78 

1.07 
1.73 
1.14 
1.69 
1.59 
1.01 
2.20 
.99 
1.55 

$1.28 
(a) 
1.79 
6c2.54 
1.58 
1.72 
(c) 
1.10 
1.10 
1.78 
1.66 
1.01 
1.28 
2.05 
1.73 
1.62 
1.44 
1.45 
1.08 
2.01 
2.84 

1.06 
1.55 
1.13 
1.65 
1.58 
.98 
2.17 
.97 
1.46 

$1.37 
4.00 
1.92 
c  2.12 
1.62 
1.79 
(c) 
1.25 
1.27 
1.86 
1.78 
1.19 
1.56 
2.25 
1.91 
1.73 
1.47 
1.49 
1.33 
2.09 
2.68 

1.30 
2.03 
1.23 
1.56 
1.62 
1.06 
2.27 
1.18 
1.55 

$2.27 
4.92 
2.56 
c2.30 
2.22 
2.53 
(c) 
1.88 
1.99 
2.35 
2.31 
2.17 
2.46 
3.22 
2.43 
2.11 
1.86 
1.80 
2.48 
2.81 
3.38 

2.44 
2.90 
2.19 
1.77 
2.07 
2.00 
2.68 
2.32 
1.93 

+  $0.90 

+      .92 
+      .64 
+      .18 
+      .60 
+      .74 
(c) 
+      .63 
+      .72 
+      .49 
+      .53 
+      .98 
+      .90 
+      .97 
+      .52 
+      .38 
+      .39 
+      .31 
+    1.15 
+      .72 
-f      .70 

+    1.14 
+      .87 
+      .96 
+      .21 
+      .45 
+      .94 
+      .41 
+    1.14 
+      .38 

Alaska  

Arkansas  
California  
Colorado  

Georgia  
Idaho  

Illinois  

Indiana  
Iowa  

Kansas  
Kentucky  

Maryland  
Michigan  
Missouri  
Montana  

New  Mexico  
North  Dakota  
Ohio  
Oklahoma  
Oregon  
Pennsylvania    (bi- 
tuminous)   
South  Dakota  
Tennessee  
Texas 

1.09 
1.72 
1.66 
.89 
2.54 
.86 
1.55 

1.11 
1.67 
1.68 
.90 
2.50 
.92 
1.55 

1.12 
1.66 
1.69 
.91 
2.29 
.90 
1.56 

1.14 
1.67 
1.67 
.96 
2.39 
.94 
1.58 

Utah     .  . 

Virginia 

Washington  
West  Virginia  
Wyoming  

Total  bituminous. 
Pennsylvania     an- 
thracite   

1.12 
1.90 

1.07 
1.84 

1.12 
1.90 

1.11 
1.94 

1.15 
2.11 

1.18 
2.13 

1.17 
2.97 

1.13 
2.07 

1.32 
2.30 

2.26 
2.85 

+      .94 
+      .55 

a  Included  with  California.  6  Includes  Alaska. 

c  California  includes  Idaho  and  Nevada  in  1914  and  1915;  Idaho  in  1916  and  1917. 
d  Includes  North  Carolina. 

e  Average  for  total  output,  including  refuse  from  washery.     The  average,  excluding  refuse,  was 
$1.71.  /  Includes  Nevada. 


COAL 


89 


AVERAGE  VALUE  PER  NET  TON  OF  COAL  AT  THE  MINES  IN  THE  UNITED  STATES  FOR 

38  YEARS 


Year 

Anthracite 

Bituminous 

Year 

Anthracite 

Bituminous 

1880 

$1.47 

$1.25 

1899 

$1.46 

$0.87 

1881 

2.01 

1.12 

1900 

1.49 

1.04 

1882 

2.01 

1.12 

1901 

1.67 

1.05 

1883 

2.01 

1.07 

1902 

1.84 

X.  12 

1884 

1.79 

0.94 

1903 

2.04 

1.24 

1885 

2.00 

1.13 

1904 

1.90 

1.10 

1886 

1.95 

1.05 

1905 

1.83 

.06 

1887 

2.01 

1.11 

1906 

1.85 

.11 

1888 

1.91 

1.00 

1907 

.91 

.14 

1889 

1.44 

0.99 

1908 

.90 

.12 

1890 

1.43 

0.99 

1909 

.84 

.07 

1891 

1.46 

0.99 

1910 

.90 

.12 

1892 

.57 

0.99 

1911 

.94 

1.11 

1893 

.59 

0.96 

1912 

2.11 

1.15 

1894 

.51 

0.91 

1913 

2.13 

1.18 

1895 

.41 

0.86 

1914 

2.07 

1.17 

1896 

.50 

0.83 

1915 

2.07 

1.13 

1897 

.51 

0.81 

1916 

2.30 

1.32 

1898 

1.41 

0.80 

1917 

2.85 

2.26 

TOTAL  PRODUCTION  OF  COAL  IN  THE  UNITED  STATES  FROM  1807  TO  THE  CLOSE  OF 

1917,  IN  SHORT  TONS 

Pennsylvania,  anthracite  . 

2,813,702,882 

Michigan  

27,906,044 

Pennsylvania,  bituminous 

3,380,627,056 

Georgia  

10,018,874 

Virginia  

132,164,477 

California  

5,153,264 

Kentucky  

303,075,049 

West  Virginia  .  .  .   . 

1,109,282,513 

Illinois  

1,234,329,819 

Colorado  

215,124,810 

Ohio  

799,433,305 

Wyoming  

148,256,505 

Missouri  

138,328,740 

Kansas  

157,448,653 

Indiana  

331,912,239 

Utah  

48,157,243 

Alabama  

323,629,988 

Oklahoma  (Indian 

Terri- 

tory)  

75,151,212 

Tennessee  

147,755,654 

Oregon  

2,327,529 

Iowa  

217,894,892 

Montana  

54,  854,203 

Arkansas  

44,186,728 

New  Mexico  

57,006,773 

North  Carolina  

477,125 

Texas  

35,405,289 

Maryland  

193,173,673 

North  Dakota.  .  .  . 

7,883,739 

Washington  

77,001,845 

Miscellaneous  

39,135,327 

Total.  .  . 

...    12,130,805,450 

The  following  chart  and  tables  are  a  brief  abstract  from  U.  S. 
Geological  Survey  Professional  Paper  100-A,  "The  Coal  Fields  of  the 
United  States,"  by  Marius  R.  Campbell. 


90 


THE  COST  OF  MINING 


COAL 


91 


•   Province,  region,  or  field 

Estimate  of  the  original  tonnage 

Anthracite  and 
semianthracite 

Semibituminous 
coal 

Bituminous 
coal 

Sub-bituminous 
coal 

Eastern  province  
Interior  province  

21,150,000,000 
400,000,000 

48,637,200,000 
1,226,300,000 

503,011,600,000 
528,273,000,000 
45,553,000,000 
354,640,000,000 
11,439,000,000 



284,548,400,000 
713,282,700,000 
53,458,900,000 

Rocky  Mountain  province  .... 

503,000,000 

Total 

22,053,000,000 

49,863,500,000 

1,442,916,600,000 

987,514,000,000 

Province,  region,  or  field 

Lignite 

Total  coal  of  all 
ranks 

Coal  below  sur- 
face from  3000  to 
6000  feet 

Production  in 
1913 

Eastern  provinces  
Interior  province             

572,798,800,000 
529,899,300,000 

422,262,001 
115,227977 

Gulf  province 

23,090,000,000 

23,090,000,000 

1,181,156 

Rocky  Mountain  province.  .  .  . 
Pacific  coast  province  

964,424,000,000 

1,294,525,400,000 
1,068,425,700,000 
64,897,900,000 

666,600,000,000 

14,588,625 
12,736,878 
3,963,582 

Total                   

1,051,290,000,000 

3,553,637,100,000 

666,600,000,000 

569,960,219 

Province,  region,  or  field 

Production  in 
1914 

Total  production 
to  end  of  1914 

Estimated  supply 
within  3000  feet 
of  surface 

Eastern  province  

375,634,969 

7,776,730,234 

561,032,000,000 

Interior  province  
Gulf  province  

108,704,258 
1,105,613 

2,014,902,039 
10,509,960 

527,874,000,000 
23,074,000,000 

Rocky  Mountain  province  

13,134,207 
11,816,078 

236,937,310 
204,697,756 

1,294,180,000,000 
1,067,609,000,000 

3,130,352 

114,929,105 

64,785,000,000 

Total 

513,525,477 

(6)10,357,706,404 

3,538,554,000,000 

(6)  A  total  production  of  10,357,706,404  tons  is  assumed  to  mean  an  exhaustion  of  about  50  per 
cent,  more,  or  15,083,100,000  tons. 


CHAPTER  VII 

COST  OF  MINING  COAL 

FACTORS  GOVERNING  COSTS — PRICE  OP  WAGES  A  RESULT  OF  EFFICIENCY — PRICE  AND 
COST  OF  COAL  IN  VARIOUS  STATES — ESTIMATE  OF  COST  FOR  VARIOUS  PLACES — 
PITTSBURG  COAL  COMPANY — CAPITAL  CHARGES — DETAILS  OF  COST  OF  COKING 
COAL  IN  VIRGINIA-ILLINOIS  FIELD — COKE  MANUFACTURE  AND  ANTHRACITE 
MINING — COST  OF  COKE — COST  OF  ANTHRACITE — PHILADELPHIA  AND  READING 
COAL  AND  IRON  COMPANY — CHANCE'S  CHART  OF  COSTS  ACCORDING  TO  THICK- 
NESS— PUBLIC  POLICY  IN  COAL  MINING — CAUSES  OF  WASTE — LIMITATION  OF  WASTE 
A  QUESTION  OF  THE  VALUE  PUT  UPON  COAL — DESIRABILITY  OF  EXTENSIVE  CON- 
SOLIDATIONS— CAPITAL  REQUIRED  FOR  COAL  MINING  EXPANSION — RECENT 

CHANGES. 

The  cost  of  coal  to  the  consumer  depends  on  two  elements  that  vary 
widely:  (1)  Mining  and  (2),  Transportation;  but  since  the  effect  of  the 
latter  is  self-evident,  I  do  not  propose  to  discuss  it. 

Factors  that  Influence  Cost  of  Mining. — I.  The  cost  of  mining  coal 
depends,  in  my  judgment,  upon  the  following  factors : 

(a)  The  thickness  of  the  seam. 

(6)  The  purity  of  the  coal  in  the  seam. 

(c)  The  regularity  of  the  seam. 

(d)  The  geological  attitude  as  regards  angle  of  dip,  occurrence  of 
faults,  etc. 

(e)  The  climate,  cost  of  living,  etc. 
(/)  The  depth. 

(g)  The  amount  of  water  to  be  pumped. 

(k)  The  solidity  of  the  roof. 

(i)  The  presence  of  gas,  dust,  or  other  elements  of  danger. 

(j)  Topography  of  the  surface. 

Some  other  factors  may  influence  the  cost  in  a  minor  degree;  such 
as  the  hardness  of  rock  encountered  in  development  work,  hardness  of 
coal,  cost  of  supplies,  etc. 

ft  will  be  noted  that  I  have  mentioned  only  natural  conditions, 
leaving  out  the  factor  that  many  would  be  inclined  to  place  first  on  the 
list — the  rate  of  wages.  I  do  not  believe  that  this  is  a  factor  at  all. 
The  price  of  labor  is  determined  by  the  natural  factors.  It  is  an  effect 
not  a  cause,  in  the  economy  of  mining.  If  we  have  two  neighboring 
districts  with  the  same  natural  advantages,  but  in  which  the  rates  of 
of  wages  are  different,  that  difference  is  apparent,  not  real.  The  difference 

92 


COST  OF  MINING  COAL  93 

will  be  equalized  by  the  supply  and  demand  for  labor  as  automatically 
as  water  runs  down  hill.  If  a  mine  pays  lower  wages  than  its  neighbor 
it  will  have  poorer  men;  if  other  conditions  are  the  same,  the  cost  will 
be  the  same.  You  cannot  change  this  natural  law;  it  is  like  the  force 
of  gravity. 

Labor  Cost  and  Wages.— I  hope  that  no  one  will  understand  this 
dictum  to  mean  that  where  natural  conditions  are  the  same,  the  wages 
will  be  the  same,  or  that  the  cost  of  labor  will  be  the  same;  on  the  con- 
trary, these  things  vary  a  good  deal.  Management,  scale  of  operations, 
appliances  of  all  kinds  vary,  or  may  vary,  almost  without  limit  among 
various  enterprises.  These  factors  help  to  establish  wages  and  labor 
costs;  they  are  quite  independent  both  of  natural  conditions  and  of 
labor  conditions,  and  have  to  do  with  the  success  or  failure  of  enterprises. 
They  introduce  variations  in  cost  that  are,  or  may  be,  equal  to  the  margin 
of  profit  that  there  is  in  the  business. 

How  Labor  Costs  may  Differ  with  Same  Rate  of  Wages. — To  elab- 
orate a  little,  let  us  suppose  that  Smith  and  Jones  are  two  rival  operators 
in  neighboring  coal  mines  in  which  the  natural  conditions  are  exactly 
the  same  and  in  which  coal  is  salable  at  $1  per  ton.  There  are  only  two 
mines  in  the  district  and  each  can  produce  twice  its  actual  tonnage. 
Smith  is  a  good  operator,  with  sufficient  capital,  equipment,  development 
and  ventilation.  He  can  mine  coal  for  60  cents  per  ton.  Jones  is  a  poor 
operator,  and  his  mine  is  poorly  opened.  It  costs  him  $1  per  ton  to 
produce  coal.  It  is  obvious  that  the  successful  and  opulent  Smith  has 
the  decision  as  to  how  great  a  difference  there  shall  be  in  labor  costs  in 
that  district.  He  can  prevent  Jones  from  making  a  profit,  and  can  close 
him  down  by  selling  coal  under  $1  per  ton,  which  is  Jones'  cost.  It  is 
obvious  that  the  difference  between  labor  costs  here  will  be  approximately 
as  6  is  to  10.  This  is  not  due  to  the  rate  of  wages;  it  is  just  the  differ- 
ence between  Smith  and  Jones. 

How  Wages  may  Differ  and  Costs  be  the  Same. — Now  let  us  suppose 
that  Smith  and  Jones  are  2000  miles  apart  and  each  sells  his  coal  at  a 
point  midway  between  them  with  equal  transportation  costs.  Smith 
can  supply  the  market  and  so  can  Jones,  and  each  wants  to  sell' all  he 
can,  and  can  produce  all  he  can  sell.  Smith  can  sell  without  loss  as  low 
as  60  cents  per  ton.  Jones,  if  he  pays  as  much  wages  as  Smith,  cannot 
sell  for  less  than  $1.  Neither  Jones  nor  his  employees  know  anything 
of  Smith's  superior  methods  and  appliances,  and  they  have  no  means  of 
living  except  by  selling  coal.  Obviously  under  these  conditions  there  is 
only  one  thing  to  do — work  for  less  money.  So  Jones  fixes  his  wages 
at  60  per  cent,  of  Smith's  wages  and  continues  business.  This  rate  is 
fixed  by  the  efficiency  of  Jones  as  against  Smith.  His  men  get  just  what 
they  earn,  fn  other  words,  the  final  result  is  exactly  the  same  as  if 
each  laborer  were  in  business  for  himself.  I 


94  THE  COST  OF  MINING 

Actual  Costs. — Returning  now  to  the  natural  factors  that  govern  the 
cost  of  coal  mining,  we  find  that  their  number  and  importance  is  very 
considerable,  and  if  all  coal  were  to  be  mined  we  should  have  enormous 
differences  of  cost.  As  a  matter  of  fact,  these  great  difference  do  not 
at  present  exist  because  the  commercial  conditions  of  the  country  cause 
the  elimination  of  all  mines  except  those  favorable  for  cheap  working. 
This  results  from  the  fact  that  there  is  in  this  country,  according  to  the 
U.  S.  Geological  Survey,  2,000,000,000,000  tons  of  coal  of  all  kinds  easily 
accessible.  This  coal  is  spread  over  an  area  of  500,000  sq.  m.,  and  may 
be  attacked  at  many  thousand  favorable  points.  The  unfavorable  seams 
will  have  to  wait  'to  be  worked  after  the  better  ones  are  exhausted. 

Price  of  Coal  at  Mines. — According  to  the  excellent  review  of  the 
"Production  of  Coal"  for  1907,  published  by  the  U.  S.  Geological  Survey, 
the  extreme  variation  in  the  price  of  coal  at  the  mines  in  the  various 
States  is  only  from  99  cents  in  West  Virginia  to  $4.10  in  Idaho.  The 
last  figure  is  for  only  7500  tons  and  doubtless  represents  a  case  where  an 
isolated  but  unfavorable  seam  may  be  worked  because  high  transporta- 
tion charges  prevent  the  introduction  of  coal  from  other  places.  Leaving 
out  such  abnormal  cases  and  considering  only  States  where  the  output 
reaches  1  per  cent,  of  the  production  of  the  country,  we  find  that  the  price 
of  bituminous  coal  at  the  mines  varies  only  between  99  cents  for  West 
Virginia  to  $1.68  for  Arkansas.  Pennsylvania  anthracite  is  valued  at 
$1.91,  but  I  shall  explain  later  that  the  cost  of  anthracite  is  radically 
different  from  that  of  bituminous  coal  and  no  comparison  should  be  made 
except  with  very  careful  explanation. 

SELLING  AND  COST  PRICES  OP  BITUMINOUS  COAL — RUN  OF  MINE 

1903  1904  1905  1906  1907 

U.  S.  price $1.24  $1.10  $1.06  $1.11  $1.14 

Cost 1.11  0.99  0.95  1.00  1.00 

United  States  average  price  for  5  years,  $1.13;  estimated  cost,  $1.00 

1907  price  Estimated 

cost. 

Pennsylvania $1 . 03  1  $0 .  93 


West  Virginia 0 . 99 

Maryland 1 . 20 

Virginia 1 . 02 

Kentucky 1 . 06 

Illinois .  1 . 07     Illinois  field.  0 .  96 

Alabama .  1 . 29     Southern  field.  1 . 17 

Arkansas . .  1 . 68     Ozark  field .  1 . 50 


0.90 

Appalachian  field.  1 . 08 

0.91 
0.95 


Colorado 1 . 40 

Wyoming 1 . 56 

Utah 1.52 

New  Mexico . .  1 . 46 


1.26 

1  40 
Rocky  Mountain  field.     ' 

1 .  o  / 

1.31 


Washington 2. 09     Puget  Sound  field  1 . 88 

Michigan 1 . 80     Michigan  field.  1 . 62 


COST  OF  MINING  COAL  95 

It  is  probable  that  the  figures  of  average  price  of  coal  at  the  mines 
give  the  best  general  idea  to  be  had  of  the  cost  of  mining  throughout  the 
country.  The  price,  of  course,  exceeds  the  cost,  but  it  can  be  confidently 
asserted  that  the  difference  is  not  over  10  to  15  cents  per  ton,  if  we  con- 
sider the  whole  output  of  States.  Within  given  fields  there  must  be  con- 
siderable variation;  some  mines  working  cheaply  and  with  large  profits, 
while  others  have  no  profits  at  all,  and  some,  if  all  capital  charges  were 
correctly  made  against  them,  would  be  found  running  at  a  loss.  But  it 
is  quite  obvious  that  the  entire  industry  cannot  run  at  a  loss  and  that  the 
average  complete  cost  must  fall  inside  the  average  selling  price.  It  is 
difficult  to  get  specific  figures  that  will  illuminate  the  general  subject 
as  accurately  as  the  broad  figures  published  by  the  Survey,  and  I  doubt 
if  we  can  form  a  better  idea  of  average  costs  than  by  assuming  them  to 
be  90  per  cent,  of  the  selling  price.  This  assumption  gives  us  the  preced- 
ing for  bituminous  coal. 

These  costs  are  intended  to  be  complete,  that  is,  to  cover  both  operat- 
ing and  capital  charges.  I  shall  endeavor  to  give  some  reasons  for  believ- 
ing them  to  be  fairly  accurate,  but  first  let  me  disavow  any  intention  of 
applying  them  to  any  particular  property  or  district.  It  would  be  more 
enlightening,  possibly,  to  take  some  detailed  statements  of  costs  and  com- 
pare and  digest  them.  But  such  statements  are  hard  to  get  and  I  must 
confess  that  those  I  have  been  able  to  secure  are  open  to  grave  question 
as  to  their  accuracy.  For  instance,  I  have  the  statements  of  a  coal  com- 
pany operating  three  different  mines.  Detailed  statements  of  operating 
costs  for  each  month  for  each  mine  are  given  for  a  period  of  years.  The 
aggregate  tonnage  and  total  operating  cost  may  be  figured  out  only  with 
great  labor.  To  get  five  years'  operation  averaged,  I  should  have  to  com- 
bine 180  different  cost  statements.  If  this  were  necessary  to  secure  the 
facts,  one  might  be  heroic  enough  to  do  it,  but,  after  all,  it  would  only  give 
the  results  of  an  insignificant  fragment  of  a  single  field  and  a  single 
management.  But  far  worse  than  this,  after  making  this  compilation, 
I  should  still  doubt  its  accuracy  because  a  single  glance  at  the  balance 
sheet  reveals  the  fact  that  in  mining  1,000,000  tons  of  coal,  $350,000  has 
been  added  to  capital  charges.  The  writing  off  of  such  charges  is  a 
matter  of  judgment,  based  on  familiarity  with  the  property  itself.  I 
cannot  possibly  supply  either  the  time  or  the  experience  required  to 
form  a  judgment  of  my  own  as  to  this  rate  of  depreciation,  and  yet,  in 
a  business  of  narrow  margin  like  that  of  bituminous  coal,  it  is  a  matter 
of  great  importance  whether  1  cent,  or  5  cents,  or  15  cents  per  ton  must 
be  added  for  depreciation. 

It  is  interesting  to  note  that  E.  V.  d'Invilliers,  in  his  article  on  " Esti- 
mated Costs  of  Mining  and  Coking"  (Trans.  A.  I.  M.  E.,  Vol.  XXXV, 
1905)  shares  the  same  difficulty  in  arriving  at  true  costs  for  coal-mining 
operations.  He  expresses  himself  as  follows: 


96  THE  COST  OF  MINING 

''The  cost  of  coal  delivered  to  an  oven,  and  the  cost  of  the  manufactured 
product,  depends  largely  upon  individual  judgment  or  practice,  and  on  general 
management.  Therefore,  without  having  access  to  the  accounts  of  a  number  of 
individual  mines,  it  is  not  possible  to  do  more  than  approximate  the  average 
regional  cost  of  mining  coal  or  manufacturing  coke ....  For,  though  each  plant 
in  a  district  may  be  mining  upon  the  same  scale  of  wages,  the  computation  of 
net  mining  costs  may  differ  to  a  considerable  extent  in  two  adjoining  plants,  due 
to  different  methods  of  bookkeeping,  to  a  difference  of  opinion  as  to  what  items 
are  properly  chargeable  to  mining  account  and  to  capital  account,  or  to  physical 
difference  at  the  two  mines." 

Mr.  d'Invilliers  goes  on  to  estimate  the  real  cost  of  mining  and  coking 
at  Connellsville  and  at  Reynoldsville,  Penn.,  the  first  a  slope  mine;  largely 
self-draining,  on  a  seam  capable  of  producing  9000  gross  tons  (10,000 
short  tons)  to  the  acre;  the  second  a  shaft  mine  where  considerable 
pumping  will  be  required  and  capable  of  producing  7200  gross  tons  (8000 
short  tons)  per  acre.  His  estimate  per  gross  ton  is  as  follows : 

Mining  Coal  Royalty  Total 
cost 

Reynoldsville $0. 66  $0. 86  $0. 04  $0. 90 

Connellsville 0.34  0.52  0.08  0.60 

Reducing  this  to  a  short-ton  basis  we  find  that  Mr.  d'Invilliers's 
estimate  of  total  cost  is : 

Reynoldsville 80  cents 

Connellsville 53  cents 

These  figures  are  for  January,  1904.  I  find  that  for  that  year  the 
average  price  of  bituminous  coal  in  Pennsylvania  is  reported  at  96  cents. 
My  arbitrary  estimate  for  cost  of  90  per  cent,  of  the  price  gives  us  86 
cents  for  that  year.  Now,  since  it  would  seem  that  the  Reynoldsville 
mine  represents  conditions  not  far  from  average  in  the  Pennsylvania 
bituminous-coal  regions,  it  appears  that  the  difference  between  my  esti- 
mate and  Mr.  d'Invilliers's  estimate  is  not  so  great,  but  that  it  might  all 
be  covered  by  a  difference  of  judgment  between  two  men  in  "what  is 
chargeable  to  operating  account." 

Pittsburgh  Coal  Company. — The  reports  of  the  Pittsburgh  Coal  Com- 
pany, which  operates  sixty  mines  in  the  neighborhood  of  Pittsburgh,  so 
situated  that  they  must  represent  nearly  average  conditions  for  the 
Pennsylvania  bituminous  field,  show  the  following:  The  average  number 
of  short  tons  mined  per  acre  is  7000.  Net  profits  for  eight  years  average 
13.8  cents  per  ton.  The  total  cost  for  all  capital  charges  is  16.2  cents 
per  ton.  If  we  assume  that  the  U.  S.  Geological  Survey  figures  for  the 
value  of  coal  at  the  mines  will  hold  good  for  the  Pittsburgh  Coal  Company, 
we  get  the  following,  per  short  ton : 


COST  OF  MINING  COAL  97 

Average  price  of  coal  for  5  years $1  08 

Cost — Capital  charges      16.2  cents 

Operating  charges  73 . 0  cents 0 . 892 

Profit 0.138 

$1.030 

Similarly  the  Monongahela  River  Consolidated  Coal  and  Coke  Com- 
pany, also  operating  near  Pittsburg,  with  an  extraction  of  8000  tons  per 
acre,  shows  the  following  for  nine  years : 

Assume  price  of  coal  as  before $1 . 03 

Cost — Capital  charges      17  cents 

Operating  charges  74  cents 0.91 

Profit : 0.12 


$1.03 

Capital  Charges^—  Without  going  into  further  tables  of  figures  I  find 
that  in  Pennsylvania  the  capital  charges  may  be  calculated  as  follows: 
A  charge  of  5  cents  per  ton  is  made  arbitrarily  to  cover  the  depletion  of 
coal  lands.  If  the  property  is  bonded,  this  5  cents  per  ton  is  put  into  a 
sinking  fund  to  retire  the  bonds. 

In  addition,  current  interest  must  be  paid  on  capital  or  bonds.  This 
charge  will  be  in  some  proportion  to  the  amount  of  unmined  coal  lands 
held  for  the  future.  Thus,  if  a  company  has  a  coal  reserve  for  100  years 
on  its  capital  account,  its  interest  charges  must  be  greater  than  if  its 
reserves  are  only  enough  for  20  years. 

It  appears  that  it  requires  approximately  $1  per  ton  of  annual  product 
to  equip  a  coal  mine  for  operation.  Thus  for  an  output  of  1,000,000  tons 
per  year  $1,000,000  will  be  needed  for  plant  and  equipment.  The 
renewal  or  depreciation  of  this  plant  will  cost  6  per  cent,  per  year. 

In  summary,  then,  we  have: 

For  coal  in  the  ground 5  cents 

For  interest  on  $1  capital 5  cents 

For  depreciation  of  same  capital 6  cents 

Total 16  cents 

It  is  self-evident  that  the  operating  costs  will  vary  more  than  capital 
costs;  probably  about  in  proportion  to  the  total.  Thus,  if  we  find  at  one 
mine  total  costs  of  96  cents,  of  which  16  cents  is  for  capital  and  80  cents 
for  operating,  we  would  probably  find  that  at  another  mine  where  the 
total  cost  is  only  72  cents,  the  cost  would  be  60  cents  for  operating  and  12 
cents  for  capital.  My  reason  for  believing  this  is  that  a  mine  that  is 
cheap  to  work  must  also  be  cheap  to  open. 

While  I  am  inclined  to  think  that  under  present  or  recent  conditions, 
the  average  cost  of  bituminous  coal  in  Pennsylvania  is  90  cents  or  more, 

7 


98  THE  COST  OF  MINING 

there  is  reason  to  believe  that  some  of  the  most  favorable  mines  work 
much  cheaper. 

Mr.  Gary,  in  his  recent  testimony  before  the  Ways  and  Means  Com- 
mittee on  tariff  revision,  states  that  the  cost  of  coke  at  the  ovens,  pre- 
sumably at  Connellsville,  chiefly,  was,  in  1906,  SI. 75  per  ton,  on  which 
there  was  54  cents  profit.  This  reduces  the  cost  of  coke  to  $1.21.  If 
the  burning  of  the  coke  costs  31  cents,  we  have  left  90  cents  for  the  coal, 
of  which  l^  tons  are  required  per  ton  of  coke.  This  figures  the  cost  of 
coal  at  the  mines  of  the  U.  S.  Steel  Corporation  down  to  60  cents  per  ton. 
Presumably  this  includes  a  sufficient  allowance  for  depreciation.  If  so, 
the  cost  seems  remarkably  low  and  probably  represents  the  cost  of  bitumi- 
nous coal  under  the  most  favorable  conditions.  At  any  rate  it  agrees 
pretty  well  with  Mr.  d'Invillier's  figures  for  a  representative  Connellsville 
mine. 

Certain  other  figures  given  by  Mr.  Gary  about  costs  are  of  interest. 
He  says  that  wages  of  all  classes  at  coal  and  coke  plants  belonging  to  the 
U.  S.  Steel  Corporation  in  1908  averaged  $2.39  per  day.  Now  at  coal 
mines  labor  is  usually  about  75  per  cent,  of  the  total  expense;  we  may, 
therefore,  calculate  that  the  whole  cost  per  man  per  day  is  about  $3.20. 
If  coal  is  mined  for  60  cents  per  ton  there  must  be  an  output  of  about  5}/£ 
tons  for  every  man.  In  the  State  of  Pennsylvania  at  large,  the  output  is 
only  3.6  tons  per  man.  If  this  output  is  obtained  at  a  total  cost  of  $3.20, 
then  the  cost  per  ton  is  89  cents.  This  agrees  with  my  other  figures  for 
Pennsylvania. 

Let  us  apply  this  reasoning  to  other  coal  fields  and  see  how  close  it 
brings  us  to  my  estimate  of  cost  at  90  per  cent,  of  the  selling  price. 

In  Michigan  the  wages  are  undoubtedly  about  the  same  as  in  Penn- 
sylvania. I  have  estimated  the  cost  of  Michigan  coal  at  $1.62  per  ton. 
The  output  per  man  per  day  is  2.11  tons.  If  we  divide  $3.20  by  this 
amount  we  get  $1.52. 

Again,  in  Wyoming  I  am  informed  that  wages  of  coal  miners  average 
about  $3.60  per  day.  If  this  is  75  per  cent,  of  the  whole  cost  per  man, 
that  cost  is  $4.80  per  day.  The  output  per  man  averaged  in  1907,  3.42 
tons;  the  cost  per  ton,  therefore,  should  be  $1.40.  This  is  exactly  my 
estimate  by  the  90-per  cent.  rule. 

I  have  no  information  as  to  the  average  wages  of  coal  miners  in  Colo- 
rado, but  some  light  can  be  had  on  costs  there  from  another  source.  The 
average  value  of  coal  at  the  mines  in  that  State  in  1907  is  given  at  $1.40. 
My  90-per  cent,  rule  gives  a  cost  of  $1.26.  The  Colorado  Fuel  and  Iron 
Company  mined  that  year  about  4,500,000  tons  of  coal  at  a  profit  of 
$900,000,  or  20  cent  per  ton.  This  profit  was  not  altogether  on  mining 
since  some  of  the  coal  was  sold  at  a  distance  from  the  mines.  Besides 
this  the  profits  were  diminished  by  certain  fixed  charges,  of  which  the 
exact  proportion  belonging  to  the  fuel  department  is  not  clear.  At  any 


COST  OF  MINING  COAL  99 

rate  it  seems  that  the  net  profits  on  coal  from  mining  were  not  over  10 
cents.  If,  then,  the  U.  S.  Geological  Survey  is  right  in  its  average  price  of 
coal,  the  actual  cost  must  have  been  about  $1.30. 

Following  are  some  more  detailed  figures  on  the  cost  of  operating  a 
self-draining  slope  mine,  in  Virginia.  The  figures  are  complete  in  all 
respects  except  that  of  depreciation.  I  am  in  doubt  whether  that  item 

is  fully  taken  care  of,  but  having  no  means  of  forming  an  individual 
opinion,  I  cannot  express  one.  The  seam  averages  7  ft.  thick: 

COST  SHEET  AT  A  VIRGINIA  COLLIERY 

1905-1906.  1906-1907. 

Per  ton  Per  ton 

Mining $0.246  $0.251 

Timbering 0.010  0.018 

Ventilation 0 . 008  0 . 010 

Removing  refuse  and  deposit 0.005  0.017 

Tracks 0.030  0.031 

Haulage 0.067  0.102 

Dumpage 0.009  0.012 

Blacksmith  shop 0 . 006  0 . 007 

Repairs 0.009  0.008 

Supplies 0.007  0.003 

Salaries— Plant .       0.017  0.019 

Switching 0.005  0.006 

Engineering 0 . 003  0 . 005 

Extraordinary  expenses 0 . 007  0 . Oil 

Adjustment  stables  account 0.005 

Sinking  fund 0. 100  0. 100 

Attorneys'  fees  and  legal  expenses 0.025  0.016 

General  expense 0.014  0.012 

Salaries— General  office 0.040  0.058 

Interest  and  discount 0.073  0. 068 

Taxes -.       0.011  0.011 

Insurance..                                                                                           0.005  0.005 


$0.702  $0.770 

Summary: 

Labor $0.382  0.423 

Supplies 0.052  0.077 

Sinking  fund 0. 100  0. 100 

$0.534  $0.600 

General  expense 0.056  0.070 

Interest,  insurance,  taxes,  attorney's  fees 0. 112  0. 100 

$0.702  $0.770 


Tons  mined 240,371         221,552 

It  is  interesting  to  note  the  increased  cost  in  1907  over  1906,  due  to 
the  unhealthy  pre-panic  business  conditions. 

The  following  table  shows  the  estimated  cost  of  coal  mining  in  various 


100 


THE  COST  OF  MINING 


parts  of  the  Illinois  field,  according  to  Mr.  George  S.  Rice.  The  only 
comment  I  can  make  is  that  the  estimates  for  depreciation  and  amortiza- 
tion seem  rather  low. 

ESTIMATE  OF  COST  OF  R.  OF  M.  COAL  IN  ILLINOIS,  AVERAGE  CONDITIONS 


Yearly  output 

Northern  111. 
longwall 
150,000  tons 

Middle  111. 
250,000  tons 

Southern  111. 
250,000  tons 

Labor 

Sup. 

Labor 

Sup. 

Labor 

Sup. 

Mining    (paid    to    miners    "pick 
rate") 

$0.87 

0.005 

0.15 
0.08 

0.03 
0.01 
0.02 

0.005 

0.051 
0.02 

0.02 
0.02 
0.01 

$0.55 
0.04 

0.071 
0.05 

0.02 
0.01 
0.015 

$0.48 

0.03 

0.06 
0.04 

0.02 
0.01 
0.015 

00.1 

0.02 
0.01 

0.01 
0.01 
0.005 

Narrow  work   (entry  driving  and 
passing  through  rolls,  etc.)  
Care    of    mine    (maintenance    of 
roads,  roof  falls,  timbering,  etc.) 
Haulage               .            .  . 

0.01 

0.031 
0.01 

0.01 
0.01 
0.005 

Hoisting  and  loading  and  care  of 
mine  top2.  . 

Steam 

Mine  management 

Total  mine  cost  

1.165 

0.125 
1.165 

0.765 

0.655 
0.765 

0.83 

0.03 
0.02 
0.02 

0.655 

0.065 
0.655 

1.29 

0.05 
0.02 
0.02 

$1.38 



0.72 

0.02 
0.02 
0.02 

Depreciation  and 
~.          ,                  amortization  .  . 

General  costs     0  ,,. 
Selling  . 

Gen'l  management 
Grand  total  



$0.90 

$0.78 

1  Chiefly  timber  and  ties. 

2  These  costs  or  the  subdivision  of  care  of  mine  top  will  run  high  unless  the  mine 
runs  fairly  steadily. 

Coke  Manufacture  and  Anthracite  Mining. — The  production  of 
commercial  anthracite  is  so  different  a  problem  from  that  of  mining 
bituminous  coal  that  its  cost  is  nearly  parallel  to  that  of  coke.  Run-of- 
mine  anthracite  is  worthless  for  fuel.  It  will  not  burn  unless  it  is  care- 
fully sized.  It  will  not  burn  if  there  is  even  a  moderate  mixture  of  slate 
or  bone  in  it.  The  sizing  and  rejection  of  impurities  necessitates  careful 
crushing,  sizing  and  washing.  It  is  distinctly  a  process  of  concentration 
as  well  as  of  sizing,  for  the  loss  in  the  " breakers"  will  average  fully  one- 
third  of  the  run-of-mine  tonnage.  The  cost  of  concentrating,  or  operating 
the  breakers,  is  from  30  to  50  cents  per  ton  shipped — not  cheap  milling 
by  any  means,  and  no  doubt  mining  men  not  acquainted  with  the  fact 
will  be  surprised  at  it.  The  comparison  may  be  tabulated  as  follows: 


COST  OF  MINING. COAL  101 

Coke  Anthracite 

Tons  run-of-mine  per  ton 1^  \\,^ 

Cost  of  manufacture  per  ton 30  to  60  cents  30  to  50  cents 

CONNELLSVILLE   REGION  PLANT  OF  500  OVENS 

Coal,  1  Yz  tons,  at  56  cents  net  ton $0 . 840 

Charging,  leveling,  drawing  and  labor 0 . 326 

Salaries,  supplies  and  depreciation 0 . 050 

Total $1.216 

It  will  be  noted  that  I  deduce  from  Mr.  Gary's  evidence  that  the  actual 
cost  of  coke  in  Connellsville  to  the  steel  company  in  1906  was  $1.21. 
REYNOLDSVILLE  PLANT  OF  500  OVENS 

Coal,  1.7  tons,  at  70  cents $1.19 

Charging,  leveling,  drawing  and  labor 0.40 

Salaries,  supplies  and  depreciation 0 . 05 

$1.64 

In  neither  of  these  cases  have  I  used  any  table  exactly  as  given  by 
Mr.  d'Invilliers.  He  does  not  give  the  details  of  his  estimates  for  a  five- 
year  average,  and  I  have  endeavored  to  supply  them.  There  seems  to  be 
some  mistake  in  his  average  of  Reynoldsville  costs,  for  they  do  not  work 
out  in  proportion  as  he  gives  them. 

Another  example  of  coke  costs  more  in  detail  is  from  a  200-oven 
hand-operated  plant  in  Virginia — in  1906 : 

Cost  of  coal,  70 . 2  cents  per  ton 1 . 027 

Crushing 0 . 023 

Charging 0.033 

Leveling  and  sealing 0 . 028 

Drawing 0 . 210 

Loading 0. 134 

Switching 0 . 023 

Salaries  at  plant 0 . 033 

Tracks 0. 008 

Repairs 0 . 021 

Supplies , 0.012 

Extraordinary  expense 0 . 006 

Insurance. ...  0.001 


Total 1.559 

In  summary: 

Raw  material 1 . 027 

Labor 0 . 459 

Supplies 0. 075 

Total 1 .561 

The  following  year,  1907,  the  costs  at  the  same  plant  were  as  follows : 

Raw  material $1 . 227 

Labor 0.524 

Supplies 0.114 

Total..  $1.865 


102  THE  .GOST  OF  MINING 

Anthracite  Mining. — The  extraction  of  run-of-mine  anthracite  is 
rather  more  expensive  than  that  of  bituminous  coal,  chiefly  because  the 
anthracite  seams  are  very  much  more  folded.  It  is  necessary  to  do  vastly 
more  development  work  in  rock,  and  necessary  also  to  use  more  timber 
in  supporting  gangways  than  is  the  case  in  flat  seams.  Moreover,  the 
constantly  changing  dip  prevents  the  use  of  uniform  methods  throughout 
the  mines.  On  the  other  hand,  the  coal  often  occurs  in  magnificent  thick 
seams.  The  actual  difference  in  cost  for  run-of-mine  I  do  not  estimate  at 
more  than  10  cents  per  ton,  92  cents  for  bituminous  and  $1.02  for  anthra- 
cite (per  short  ton,  the  long  ton  is  used  at  the  mines) . 

Below  will  be  found  consecutive  statements  of  the  costs  of  the  Phila- 
delphia &  Reading  Coal  and  Iron  Company  for  a  period  of  years.  These 
tables  in  the  main  explain  themselves,  but  it  is  worth  while  to  make  the 
following  comments:  The  actual  cost  of  mining  and  repairs  will  be  seen 
to  average  about  $1.80  per  long  ton,  equivalent  to  about  $1.60  per  short 
ton.  This  is  for  current  operation  only,  but  it  includes  the  cost  of  putting 
the  coal  through  the  breakers,  and  it  is  a  cost  based  on  the  finished  pro- 
duct which  may  be  calculated  to  be  only  two-thirds  the  run-of-mine 
product.  Details  for  cost  of  breaking  are  not  given,  but  from  inquiries 
made  in  the  region,  it  seems  that  40  cents  per  ton  is  an  average.  Deduct- 
ing this  sum  we  get  $1.20  for  mining  alone,  and  this  is  for  mining  lj^  tons 
of  run-of-mine  coal.  The  actual  cost,  then,  per  ton  of  run-of-mine  to 
this  company  seems  to  be  some  80  cents  per  short  ton. 

The  capital  and  general  charges  that  follow  in  the  statements  largely 
explain  themselves.  The  only  item  to  which  I  wish  to  draw  special 
attention  is  that  of  improvements,  which  is  regularly  charged  in  as  an 
operating  cost.  This  is  entirely  as  it  should  be,  and  the  charge  is  doubt- 
less based  on  the  theory  that  the  annual  improvements  to  plant  are  suffi- 
cient to  cover  the  renewal  of  equipment.  The  company  has  charged  to 
improvements  and  equipments  at  collieries  $13,092,635.  This  is  equiva- 
lent to  about  $1.30  per  ton  on  its  annual  output.  Some  companies  would 
have  charged  a  much  larger  amount  to  this  item.  The  amount  has 
not  been  increased  in  recent  years  in  spite  of  the  fact  that  since  1902  the 
output  has  increased  50  per  cent.  It  is  usual  to  charge  off  for  deprecia- 
tion at  coal  mines  6  per  cent,  of  the  capital  employed  in  the  plant  and 
equipment.  In  the  case  of  the  Reading  company  such  a  sum  would  have 
been  sufficient  in  1902,  but  would  fall  far  short  of  the  charges  made  in 
1908.  As  costs  are  usually  calculated,  therefore,  it  would  seem  that  this 
company  is  writing  off  somewhat  more  for  depreciation  than  is  strictly 
necessary.  It  would  be  obviously  logical  for  the  company  to  hold  on  its 
balance  sheet  a  greater  capital  for  an  output  of  10,000,000  tons  per  year 
than  for  an  output  of  only  7,000,000  tons. 

In  other  words,  I  wish  to  express  my  conviction  that  the  costs  given 
by  the  Philadelphia  &  Reading  company  for  anthracite  mining  are  ade- 


COST  OF  MINING  COAL 


103 


quate  in  all  respects,  and  that,  therefore,  the  accompanying  statement 
gives  an  excellent  idea  of  the  real  cost  of  anthracite  mining. 

The  following  is  an  interesting  chart  by  Mr.  H.  M.  Chance,  showing 
the  relation  of  cost  of  anthracite  mining  to  the  thickness  of  the  seam. 
Mr.  Chance  points  out  that  the  most  important  factor  in  the  variation 
of  coal-mining  cost  is  the  thickness  of  the  seam,  and  nothing  will  show 
the  facts  in  the  case  more  plainly  than  the  chart  which  I  take  from  Mr. 
Chance's  communication  to  the  Engineering  and  Mining  Journal  of 
July  29,  1909. 

Curves  showing  Cost  of  Mining  Anthracite  Coal,  as 
affected  by  thickness  of  the  coal  worked,  by  H.M.  Chance. 


6'     6      6" 

20  18  16  14  12  10       9       8       7      6      5       4      3 

Thickness  of  Coal  in  Feet 

Upper  Curve  shows  Costs  under  Unfavorable  Mining  Conditions 
Lower  Curve      "         "          "       Favorable  " 

FlG.  2. 


6" 
2      1 


104 


THE  COST  OF  MINING 


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COST  OF  MINING  COAL  105 

Public  Policy  in  Coal  Mining. — It  has  often  been  pointed  out  that  coal 
in  the  earth  is  a  natural  resource,  the  use  of  which  is  important  not  only 
to  the  owners  of  the  coal  lands,  but  to  the  nation  at  large,  and  that  since 
the  supply  of  coal  is  limited  by  nature,  wisdom  demands  that  it  should 
be  wisely  handled.  This  is  a  fact  that  has  been  recognized  by  many 
governments  from  the  earliest  times,  and  the  policy  of  treating  mining 
rights  as  public  rather  than  as  private  property  has  been  adopted  by 
probably  the  greater  number  of  nations.  These  ideas  have  been  so 
widely  discussed  that  they  are  already  known  to  the  majority  of  people, 
and  I  wish  to  call  attention  only  to  some  considerations  that  may  have  a 
practical  value. 

Causes  of  Waste  in  Coal  Mining. — An  interesting  paper1  contributed 
by  Mr.  George  S.  Rice  to  the  Transactions  of  the  American  Institute 
of  Mining  Engineers  at  the  Chattanooga  meeting,  October,  1908,  calls 
attention  to  the  fact  that  the  percentage  of  yield  in  Illinois  from  the  coal 
seams  is  only  from  50  per  cent,  to  95  per  cent.,  and  that  the  losses  are 
from  5  per  cent,  to  50  per  cent,  of  the  available  coal.  It  would  be  in- 
teresting if  space  permitted  to  quote  Mr.  Rice's  article  in  full,  but  since 
that  is  not  feasible  I  shall  call  attention  to  some  of  the  principal  conclu- 
sions developed. 

Mr  Rice  summarizes  the  causes  of  mining  waste  as  follows: 

(1)  Cheapness  of  coal  "in  place;"  that  is,  in  the  seam. 

(2)  Low  market  prices  resulting  from  extreme  competition. 

(3)  Character  of  the  seam,  roof,  and  floor  as  determining  the  method 
of  mining. 

(4)  Surface  subsidence  due  to  mining. 

(5)  Interlaced  boundary  ownerships. 

(6)  Carelessness  in  mining  operations. 

Mr.  Rice  says:  "The  first  two  factors  taken  together  are  the  con- 
trolling ones  in  most  mining  operations,  in  influencing  the  choice  of  a 
mining  system." 

This  statement  is  so  true  that  too  much  emphasis  cannot  be  laid 
upon  it.  It  has  been  pointed  out  in  Chapter  II  that  economy  may 
demand  the  sacrifice  of  considerable  portions  of  low-priced  mineral 
products  in  order  to  secure  a  sufficiently  low  mining  cost;  and  it  will 
be  pointed  out  in  various  places  in  succeeding  chapters  that  the  value 
of  the  material  mined  is  always  one  of  the  greatest  factors  in  the  cost 
of  mining.  So  pre-eminent  is  this  factor  that  it  is  almost  possible  to 
say  that  it  is  the  only  one  of  real  consequence  in  determining  percentage 
of  waste;  for  it  is  self-evident  that  were  the  product  sufficiently  valuable, 
a  system  or  method  would  be  found  to  prevent  the  loss  of  it.  The 
prevention  of  losses,  therefore,  as  a  matter  of  public  policy,  is  simply 
a  question  of  dollars  and  cents.  If  the  public  wishes  the  coal  to  be  mined 

*  Mining  Wastes  and  Mining  Costs  in  Illinois. 


106  THE  COST  OF  MINING 

cleaner,  it  must  be  willing  to  pay  a  sufficient  price  to  make  clean  mining 
profitable  to  the  operator. 

It  is  also  self-evident  that  common  sense  must  be  invoked  to  place 
a  limit  on  efforts  to  secure  this  kind  of  economy.  A  reference  to  Mr. 
Chance's  chart  discloses  at  a  glance  that,  as  the  thickness  of  the  coal  seam 
diminishes,  the  cost  increases  without  limit — in  mathematical  language, 
approaches  infinity.  It  is  preposterous,  therefore,  to  attempt  to  save 
all  coal,  because  a  seam  one  inch  thick  would  cost  $50  a  ton;  a  seam  two 
inches  thick  would  cost  $25  a  ton ;  in  each  case  at  the  mine.  Such  costs 
would  preclude  the  possibility  of  using  coal  for  anything  like  the  ordinary 
purposes.  Efforts  toward  the  prevention  of  waste,  therefore,  must  be 
confined  strictly  within  limits  that  can  easily  be  agreed  upon  as  reasonable 
for  any  given  district.  For  instance,  in  Illinois  it  might  be  agreed  that 
coal  seams  down  to  a  thickness  of  two  feet  should  be  worked.  Such  a 
decision  might  have  far-reaching  consequences  in  the  conduct  of  the 
coal-mining  business.  For  instance,  suppose  an  operator  had  one  seam 
6  ft.  thick  and  another  seam  2  ft.  thick.  If  we  imagine  that  (1)  a  price 
is  fixed  that  would  allow  the  mining  of  a  2-ft.  seam  without  loss  and  at 
the  same  time  without  profit,  and  (2)  that  the  law  requires  the  operator 
to  mine  his  2-ft.  seam  or  else  lose  the  right  to  mine  the  6-ft.  seam,  it  is 
evident  that  the  operator  would  be  willing  to  mine  the  coal  according 
to  all  requirements;  because  the  6-ft.  seam  would  be  so  profitable  that 
the  mining  of  the  2-ft.  seam  without  profit  would  not  be  a  serious  in- 
convenience. If,  however,  it  were  a  question  of  mining  a  2-ft.  seam 
without  profit,  in  connection  with  a  3-ft.  seam  with  a  very  small  profit, 
the  operator  would  probably  feel  that  the  returns  of  the  enterprise 
would  be  too  small  and  he  would  not  undertake  it. 

The  question  of  effective  economy  in  coal  mining  as  regards  waste, 
therefore,  is  a  question  precisely  like  the  productive  tariff  so  far  as  its 
effect  on  the  public  at  large  is  concerned.  In  the  case  of  the  tariff, 
however,  the  public  is  found  to  subject  itself  readily  to  loss  because  it  is 
quite  possible  to  make  the  majority  of  the  voters  beneficiaries  of  the 
tariff.  If  this  is  not  actually  the  case  a  majority  think  themselves 
benefited,  believing  that  it  is  of  more  consequence  to  them  to  get  a  higher 
price  for  the  products  they  have  to  sell  than  to  pay  a  higher  price  for  the 
products  they  have  to  buy. 

In  the  case  of  a  proposal  to  raise  the  price  of  coal  in  order  to  prevent 
waste,  it  is  not  at  all  evident  how  the  public  could  be  imposed  upon  by 
such  considerations.  Granted  that  the  coal  miners  would  find  such  a 
policy  an  unqualified  benefit,  it  is  not  clear  how  the  public  at  large  could 
be  induced  to  pay  a  higher  price  for  one  of  its  chief  necessities  for  no 
object  except  an  altruistic  regard  for  future  generations. 

It  seems  as  if  the  only  rational  way  to  prevent  wastes  and  at  the 


COST  OF  MINING  COAL  107 

same  time  to  secure  better  operation  all  around,  with  a  saving  of  human 
life  as  well  as  of  coal,  is  to  permit  a  carefully  guarded  monopoly  in  each 
field  of  the  business  of  coal  mining.  Monopoly  is  a  disagreeable  word, 
but  it  is  the  only  one  that  conveys  the  meaning  in  plain  English.  It 
would  have  to  take  the  form  either  of  a  consolidation  of  ownership  or  of 
a  pooling  of  interests  under  government  supervision.  My  own  conviction 
is  that  the  interests  both  of  the  public  at  large  and  of  the  coal-mining 
business  itself  demand  such  an  arrangement. 

The  business  in  the  United  States  is  suffering  wofully  from  over- 
competition.  A  vast  amount  of  capital  is  invested  in  coal  mines  that  is 
put  in  extreme  jeopardy  through  the  failure  to  secure  a  reasonable  price. 

It  is  just  as  disastrous  from  an  economic  standpoint  for  the  coal 
business  to  be  over-developed  as  to  be  under-developed.  The  under- 
development  of  coal  mines  means,  of  course,  high  prices  through 
failure  of  the  supply  and  consequent  loss  to  the  public.  Over-develop- 
ment, on  the  other  hand,  means  a  loss,  through  a  part  of  the  public's 
money  being  tied  up  in  useless  enterprises. 

It  does  not  seem  unreasonable  to  hope  that  in  each  mining  district 
the  government  might  fix  a  price  for  the  sale  of  coal,  simply  on  the  basis 
of  an  actual  cost  of  mining  down  to  a  certain  thickness.  Such  a  regula- 
tion of  the  coal-mining  business  would  not  be  inherently  different  from 
the  regulation  of  freight  rates  by  the  Interstate  Commerce  Commission. 
If  such  an  arrangement  were  made  all  that  the  government  or  state 
inspectors  would  need  to  do  would  be  to  look  out  for  the  clean  mining  of 
the  thinnest  seams;  the  thick  ones  would  be  well  taken  care  of  without 
urging. 

New  Capital  Required  in  Coal  Mining  Operations. — A  glance  at  the 
figures  in  Chapter  VI  reveals  the  fact  that  in  the  ten  years  between  1 897 
and  1907  the  production  of  coal  rose  from  200  million  tons  to  480  millions, 
equal  to  an  average  increase  of  28  million  tons  a  year.  Without  going 
into  details  we  may  assume  that  the  equipment  of  the  mines  for  this 
production  must  cost,  on  an  average,  at  least  $1.25  per  annual  ton. 
Under  the  most  favorable  conditions  the  cost  of  equipment  and  develop- 
ment is  $1  per  annual  ton  for  flat  bituminous  coal  seams;  for  the  more  dif- 
ficult forms  of  mining,  such  as  anthracite,  the  cost  per  annual  ton  is  at  least 
$2.50,  and  for  coke  production  as  much  or  more.  The  average  amount  of 
new  capital  going  into  the  coal  business,  therefore,  is  at  least  $35,000,000 
a  year  and  $40,000,000  is  a  more  probable  figure.  This  is  an  exceedingly 
important  fact  to  bear  in  mind  in  considering  any  possible  consolidations 
in  this  business. 

Changes  in  Recent  Years. — The  following  extract  is  from  a  press 
bulletin  of  the  United  States  Geological  Survey  on  the  Coal  Industry 
in  1917. 


108  THE  COST  OF  MINING 

THE  COAL  INDUSTRY  IN  1917 

The  inventory  of  the  nation's  resources  that  the  war  made  necessary  brought 
to  light  many  new  facts  about  coal  mining  which  will  be  of  lasting  value  to  the 
industry  and  to  the  public.  As  long  as  the  war  lasted  these  incidental  lessons 
were  lost  sight  of  under  the  pressure  of  meeting  the  emergency  created  by  the 
shortage  of  fuels,  but  with  the  return  of  peace  the  experience  gained  during  the 
war  is|being  gathered  together  in  a  series  of  reports  on  the  industry,  the  first  of 
which,  "Coal  in  1917,"  by  C.  E.  Lesher,  has  just  been  published  by  the  United 
States  Geological  Survey,  Department  of  the  Interior. 

The  period  from  1914  through  1917  and  1918  and  into  1919  may  be  regarded 
as  a  distinct  epoch  in  the  coal  industry,  of  which  the  year  1917  represented  only 
one  section,  but  a  section  which,  if  not  the  most  remarkable  for  its  achievements, 
was  at  once  the  most  chaotic  and  the  most  momentous  in  the  history  of  the 
industry. 

It  is  not  difficult  to  marshal  the  events  and  factors  that  mark  1917  as  unusual: 
An  extraordinary  demand,  increasing  after  April,  when  this  country  entered  the 
war,  and  unsatisfied  throughout  the  year;  high  prices  and  speculation  in  "free" 
coal;  the  first  effort  at  regulation  of  prices  through  the  Committee  on  Coal  Pro- 
duction; the  Pomerene  amendment  to  the  Lever  Act  and  the  fixing  of  prices  and 
appointment  of  the  Fuel  Administrator  by  the  President;  labor  troubles;  priority 
orders;  car  shortage  and  other  difficulties  in  transportation;  severe  storms  in 
December  that  blocked  the  railroads;  the  withdrawal  of  ships  from  the  coast- 
wise trade  to  New  England;  unequal  distribution  of  coal  and  constant  fear  of  a 
fuel  famine  in  many  sections;  reluctance  of  many  producers  and  distributors  of 
coal  to  accept  governmental  regulations  in  general  and  the  program  of  the  Fuel 
Administration  as  it  was  developed  in  particular. 

In  response  to  the  unprecedented  demand  the  bituminous  mines  produced 
551,790,563  net  tons,  or  nearly  10  per  cent,  more  than  the  output  of  the  year 
before.  The  anthracite  output  was  96,611,811  net  tons,  an  increase  over  1916 
of  13.7  per  cent.  The  total  output  of  both  hard  and  soft  coal  was  thus  over 
650,000,000  tons. 

This  record  output  was  accomplished  by  a  labor  force  of  603,143  men  in  the 
bituminous  and  154,174  in  the  anthracite  mines.  In  spite  of  the  draft  the  number 
of  workers  in  the  bituminous  industry  was  greater  in  1917  than  in  1916. 

Material  progress  was  made  during  the  year  in  the  introduction  of  the  eight- 
hour  day.  Whereas  in  1916  about  41  per  cent,  of  the  bituminous  workers  were 
employed  in  mines  where  the  standard  working  day  was  longer  than  eight  hours, 
in  1917  the  number  in  such  mines  had  fallen  to  21  per  cent.  The  change  was 
largely  the  result  of  reduction  in  working  hours  in  Kentucky,  Maryland, 
Pennsylvania  (bituminous),  Tennessee,  Virginia,  and  West  Virginia,  particularly 
in  the  larger  nonunion  fields. 

In  response  to  numerous  inquiries  statistics  were  collected  regarding  the  thick- 
ness of  vein  which  it  is  profitable  to  mine.  Many  people  will  be  surprised  to 
learn  that  in  1917  more  than  20,000,000  tons  of  soft  coal  was  mined  from  beds 
less  than  3  feet  thick.  The  percentages  drawn  from  each  thickness  of  seam 
are  shown  in  the  following  table: 


COST  OF  MINING  COAL 


109 


PERCENTAGE   OF   TOTAL   OUTPUT   OF   BITUMINOUS   COAL   AND  LIGNITE  PRODUCED 

FROM  BEDS  OF  DIFFERENT  THICKNESS  IN  1917 

Under  2  feet 06 

2  to  3  feet 32 

3  to  4  feet 13 

4  to  5  feet 17. 

5  to  6  feet 19. 

6  to  7  feet 13. 

7  to  8  feet 9 

8  to  9  feet 5^3 

9  to  10  feet 5.6 

10  to  20  feet 2.0 

20  feet  or  more 0.3 

Thickness  not  reported 8.5 

100.00 

The  gradual  and  finally  rapid  change  in  the  cost  of  producing  coal 
since  1908  are  shown  by  the  records  of  a  company  producing  from 
4,000,000  to  6,000,000  tons  a  year  in  West  Virginia. 


Mining 

General 

Taxes 

Depreciation 

Selling  price 

Total  cost 

1903 

0  67 

1909 

0.60 

0.09 

0.01 

0.02 

0.85 

0.72 

1910 

0.62 

0.07 

0.01 

0,02 

0.88 

0.72 

1911 

0.69 

0.10 

0.01 

0.02 

0.84 

0.82 

1912 

0.68 

0.10 

0.01 

0.02 

0.88 

0.82 

1913 

0.69 

0.11 

0.01 

0.02 

0.93 

0.83 

1914 

0.66 

0.12 

0.01 

0.02 

0.96 

0.81 

1915 

0.60 

0.11 

0.02 

0.02 

0.93 

0.75 

1916 

0.70 

0.13 

0.02 

0.02 

1.14 

0.87 

1917 

1.04 

0.18 

0.04 

0.02 

2.16 

1.28 

In  1918  and  1919  it  is  probable  that  these  costs  rose  to  about  $1.70  or 
$1.80  per  ton. 

In  the  midst  of  the  vast  amount  of  statistics  published  by  the  govern- 
ment on  coal  production  I  have  not  thought  it  worth  while  to  enter  into 
any  further  analysis.  It  may  be  stated  confidently  that  the  same  forces 
have  operated  almost  equally  in  all  fields  and  in  all  departments  of  the 
business,  for  example  in  anthracite  mining  and  in  coke  manufacture. 


CHAPTER  VIII 

THE   INDUSTRIAL   CLEARING   HOUSES   AND    STATISTICS    OF 

IRON  PRODUCTION 

LIMITED  AREAS  OP  IRON  MANUFACTURE — THEIR  ECONOMIC  HEGEMONY — ITS  RECENCY 
— REASONS  FOR  THE  RESTRICTIONS  OF  IRON  MANUFACTURE  TO  AREAS  OF  CONVEN- 
IENT DISTRIBUTION POLITICAL  IMPLICATIONS PROBABLE  PERMANENCY  OF  THE 

INDUSTRIAL  CLEARING  HOUSE  AREAS THE   SUPPLIES   OF  COAL  AND   IRON  OF  THE 

PRINCIPAL  NATIONS WORLD  PRODUCTION  OF  PIG  IRON  AND  STEEL PERSPECTIVE 

OF  DEVELOPMENTS  SINCE  1850. 

Nine  tenths  of  the  world's  output  of  iron  is  persistently  made  in  two 
limited  areas.  If  we  construct  a  triangle  the  points  of  which  are  at 
Boston,  Milwaukee  and  Birmingham,  Ala.,  we  shall  include  an  area  of 
some  275,000  square  miles,  within  which  practically  all  the  iron  of  the 
Western  Hemisphere  is  produced.  To  get  the  proportion  of  things  let  us 
remember  that  the  area  of  this  hemisphere  exceeds  15,000,000  square 
miles.  In  Europe,  if  we  take  the  island  of  Great  Britain  south  of  Glasgow 
and  a  territory  on  the  continent  roughly  inside  a  line  drawn  through 
Havre  to  Paris  to  Strasburg  to  Vienna  to  Warsaw  to  Stettin  to  Hamburg, 
we  find  an  area  of  about  325,000  square  miles,  within  which  is  manu- 
factured more  than  eighty  per  cent,  of  the  iron  of  the  Eastern  Hemisphere, 
the  area  of  which  is  more  than  35,000,000  square  miles.  In  these  two 
fields  there  is  a  population  of  about  175,000,000  at  least  a  tenth  of  all  the 
people  of  the  world  in  about  one  ninetieth  of  the  land  surface.  Within 
these  two  tracts  are  found  the  six  largest  cities,  the  chief  universities, 
libraries,  works  of  art;  the  radiating  points  of  literature,  fashion,  opinion; 
the  seats  of  political,  social,  military  and  naval  power;  likewise  the  seats 
of  finance,  of  manufacture  and  of  industrial  organization. 

In  the  raising  of  the  U.  S.  Liberty  Loans,  the  area  mentioned,  with 
forty  per  cent,  of  the  population  of  the  country,  was  allotted  seventy  per 
cent,  of  the  subscription.  The  arithmetic  of  this  is  that  each  person 
within  this  area  was  expected  to  subscribe  two  and  a  half  times  as  much  as 
a  person  outside  of  it.  The  same  proportion  of  things  holds  true  in 
Europe,  perhaps  still  more  strikingly.  I  take  it  that,  in  the  United 
States,  at  least,  these  facts  do  not  indicate  that  the  average  man  in  the 
indicated  area  is  much  richer  or  lives  more  comfortably  than  the  man 
outside  of  it,  still  less  that  he  is  a  person  of  superior  gifts  and  energy; 
rather  that  for  powerful  economic  reasons,  a  preponderance  of  the  financial 
interests  owned  outside  are  lodged  in  and  managed  from  within  it. 

110 


THE  INDUSTRIAL  CLEARING  HOUSES  111 

It  seems  appropriate  to  call  these  areas  the  industrial  clearing  houses. 
It  is  these  regions  that  buy  the  surplus  foods  from  the  rest  of  the  world, 
hundreds  of  millions  of  bushels  of  wheat,  hundreds  of  millions  of  pounds 
of  meat,  sugar,  coffee  and  tobacco,  and  establish  the  price  for  them. 
Likewise  wool,  cotton,  diamonds,  gold,  copper,  tin,  lead,  zinc,  practically 
all  the  staples  of  commerce,  except  such  as  may  be  utilized  by  the  local 
handicraftsman,  go  to  these  regions  for  manufacture,  distribution  and 
market. 

This  state  of  affairs  is  of  recent  growth.  The  recorded  history  of 
great  civilized  communities,  many  of  whom  were  more  skilful  in  certain 
arts  than  the  people  of  the  present  day,  goes  back  at  least  4000  years. 
Go  back  one  tenth  of  that  space,  400  years,  and  what  do  we  find?  Con- 
stantinople was  then  more  influential  than  London,  Rome  than  Berlin, 
Madrid  than  Paris.  Mexico  and  Cuzco  were  seats  of  empire  and 
organization,  while  New  York  was  a  leafy  island  and  Chicago  a  swamp, 
both  in  a  wilderness  supporting  only  a  few  savages  whose  culture  was 
that  of  the  old  stone  age.  It  is  true  that  in  Europe,  the  English,  the 
Flemings  and  the  Germans  had  long  been  known  and  had  made  them- 
selves felt;  they  had  made  some  progress  in  the  arts  and  had  even  in- 
vented printing,  but  they  were  chiefly  known  to  the  outside  world  as 
formidable  trouble  makers  and  fighting  men,  rude  in  manners  and  in 
speech :  taking  their  crude  ideas  of  fashion,  learning  and  art  by  imitation 
of  the  peoples  of  the  Mediterranean. 

Even  much  later  than  this,  in  1685,  according  to  Macaulay,  England 
had  a  population  of  some  five,  or  five  and  a  half,  million  people  of  whom 
nearly  one  tenth  were  in  London.  That  metropolis  had  a  death  rate 
similar  to  that  of  Ashanti.  It  had  no  sanitary  appliances  or  regulations 
whatever.  Its  streets  were  ill  paved,  or  not  at  all.  Gentlemen  wore 
swords  and  pistols  in  the  streets  with  which  to  defend  themselves.  Ladies 
going  out  at  night  were  carried  in  litters,  accompanied  by  troops  of  armed 
guards  and  by  servants  carrying  lanterns.  An  enterprising  citizen  had 
just  begun  to  light  the  streets  by  hanging  oil  lamps  at  a  few  places. 
Outside  of  London  there  was  not  a  town  of  30,000,  and  the  two  largest 
were  Norwich  and  Bristol.  Of  the  latter  place  travelers  mentioned  with 
astonishment  that  one  could  stand  in  the  middle  of  the  town  and  see 
nothing  but  houses.  Liverpool,  Manchester  and  Glasgow  were  villages 
of  some  three  of  four  thousand  each.  The  entire  shipping  of  the  kingdom 
measured  some  70,000  tons,  of  which  Liverpool  owned  one  or  two  per  cent. 
The  roads  were  of  the  crudest  sort.  Coaches  of  noblemen  and  ambassa- 
dors were  frequently  stuck  in  the  mud  within  a  few  miles  of  London, 
though  drawn  by  six  horses  and  often  pushed  by  a  crowd  of  servants  or 
retainers  that  rode  with  them.  Ordinary  long  distance  travel  was  by 
horseback.  The  wages  of  agricultural  laborers  was  from  4  to  6  shillings 
a  week;  of  artizans  in  factories  a  shilling  a  day.  The  price  of  wheat  was 


112  THE  COST  OF  MINING 

about  the  same  as  it  is  today  (or  as  it  was  before  the  war) ;  the  common 
people  rarely  ate  it,  but  lived  mainly  on  oats  and  barley.  Macaulay, 
writing  in  1850,  reviewed  with  satisfaction  and  amazement  the  progress 
that  had  been  made  and  thought  it  not  unreasonable  to  suppose  that  by  a 
continuance  of  it  some  future  generation  would  see  carpenters  earning 
10  shillings  a  day. 

Thus  England,  only  two  hundred  years  ago  or  so,  was  in  precisely  the 
same  economic  state  as  the  remoter  parts  of  Russia  are  in  now;  where 
railroads  and  even  turnpikes  are  unknown,  where  grain  is  cut  with  the 
sickle,  where  reading  and  writing  belong  only  to  the  favored  few.  But 
just  as  rural  Russia  in  the  nineteenth  century  was  able  to  produce  its 
Tolstoi  and  its  Veres tchagin,  so  rural  England  in  the  seventeenth  had  its 
Isaac  Newton  and  its  John  Milton.  A  certain  nobleman,  the  Earl  of 
Worcester  I  believe,  considered  a  bit  crazy  ,by  his  friends,  persisted  in 
experimenting  with  a  "fire,"  or  steam  engine,  from  which  he  predicted 
wonders.  Coal  was  brought  by  ship  from  Newcastle  to  London  where 
it  was  extensively  used  for  household  purposes,  and  because  it  came 
by  sea  it  was  called  "sea  coals." 

It  was  precisely  in  these  latter  facts  that  lay  the  germs  of  the  future 
wealth  and  power  of  the  Anglo-Saxon  race.  To  the  accustomed  pursuits 
of  agriculture  and  small  trade  the  inquiring  minds  of  England  were 
beginning  to  add  some  knowledge  of  physical  science  and  her  artizans 
were  beginning  to  burn  coal  in  their  forges  and  furnaces. 

Americans  have  always  been  in  the  habit  of  calling  their  country 
"new;"  England  is  the  "old"  country.  They  do  not  realize  fully  that 
the  comforts  and  establishments  that  distinguish  modern  life  from  that 
of  former  times  are  new  in  all  countries,  that  England  only  preceded  the 
United  States  by  a  few  years  in  most  of  the  pursuits  and  accomplishments 
which  we  have  wished  to  import  and  imitate;  and  that  in  fact  many  of 
the  conspicuous  changes  in  modern  life  have  originated  in  America 
as  much  as  in  Europe.  It  has  been  the  habit  to  suppose  that  certain 
industries  are  peculiar  to  "old"  countries  and  that  the  reason  why  such 
industries  are  not  found  in  "new"  countries  is  simply  that  those  regions 
have  not  grown  up.  Thus  I  suppose  many  people  imagine  that  iron 
manufacture  may  successfully  be  practiced  anywhere  as  soon  as  people 
"get  around  to  it." 

But  this  does  not  seem  to  be  the  case.  It  is  true  that  iron  manufac- 
ture on  a  large  scale  has  migrated  from  England  eastward  into  Germany 
and  westward  into  the  United  States.  It  is  true  also  that  it  will  probably 
flourish  in  other  regions  in  the  course  of  time.  A  considerable  beginning 
has  been  made  in  southern  Russia,  and  a  still  greater  industry  may  spring 
up  in  China,  some  day.  But  one  essential  fact  must  not  be  overlooked; 
this  industry  has  only  migrated  as  far  as,  and  to  those  regions  in  which, 
the  conditions  in  the  British  Isles  are  duplicated  or  improved  upon. 


THE  INDUSTRIAL  CLEARING  HOUSES  113 

The  reasons  which  anchor  the  industry  within  such  limits  are  strong  ones 
and  lie  in  a  combination  of  natural,  commercial  and  financial  circum- 
stances that  are  not  easily  or  quickly  altered.  We  concede  that  human 
affairs  are  mutable  and  that  the  splendors  of  today  are  merely  the  ruins 
of  tomorrow  and  still  we  shall  find  reason  to  believe  that  the  present 
general  relations  of  the  industrial  world  are  pretty  firmly  established; 
quite  firmly  enough  to  form  the  true  basis  for  the  political  thought  of 
the  present  age. 

It  is  scarcely  worth  while  to  dwell  upon  such  commonplaces  as  that 
iron  is  the  most  abundant  and  most  useful  metal  used  by  man,  that  its 
manufacture  requires  large  supplies  of  fuel,  ore  and  labor.  Other  factors 
are  equally  important  and  upon  moderate  consideration,  equally  obvious. 

1.  The  heat,  power  and  labor  that  will  make  iron  effectively  may  be 
applied  with  equal  effectiveness  to  other  manufactures.     It  follows  that 
wherever  these  supplies  are  such  that  iron  can  be  manufactured  cheaply, 
other  commodities  may  likewise  be  manufactured  cheaply. 

2.  Iron  goes  into  a  multiplicity  of  uses  and  a  multiplicity  of  forms, 
each  requiring  special  appliances  and  even  a  special  plant  for  its  produc- 
tion.    Thus  the  industry  is  tremendously  specialized.     For  instance  a 
factory  in  Pittsburg  employs  2500  men  just  making  bolts  and  nuts. 
Such  manufactures  can  only  flourish  in  centers  from  which  great  consum- 
ing populations  may  be  supplied.     To  illustrate  this  point  let  us  imagine 
the  establishment  of  an  iron  industry  on  the  Pacific  Coast,  say  at  San 
Francisco,  to  supply  iron  to  the  state  of  California.     Let  us  imagine  that 
adequate  supplies  of  ore  and  fuel  are  to  be  had,  which  is  not  of  course  the 
case.     The  people  of  California  might  consume  about  1,000,000  tons  of 
iron  a  year,  but  in  what  forms?     Why  in  all  forms.     They  would  need 
steel  rails,  structural  forms,  castings  of  all  descriptions,  tools,  machines, 
nails,  barbed  wire,  galvanized  iron,  bolts  and  nuts,  and  many  other  kinds 
of  iron  each  of  which  requires  a  special  plant.     Each  product  would  have 
to  be  supplied  in  about  one  fortieth  as  great  a  quantity  as  that  in  which 
it  is  made  in  the  eastern  district.     Now  the  initial  cost  of  a  plant  contains 
a  certain  constant  expenditure  whether  the  plant  be  small  or  great. 
There  must  be  a  site,  buildings,  power  plant,  machinery  and  facilities 
for  transportation.     It  is  only  after  this  foundation  is  laid  that  the  appli- 
ances for  producing  the  specialty  may  be  added  at  a  cost  which  will  be  in 
a  fixed  ratio  to  the  product.     Is  it  not  evident  that  to  build  a  complete 
iron  industry  in  California  will  require  much  more  capital  per  ton  of  prod- 
uct than  will  be  required  in  Pennsylvania?     The  actual  cost  of  plant 
per  ton  produced  annually  in  some  departments  of  this  business  must 
run  up  to  $200  to  $500.     The  use  of  such  capital  and  the  depreciation  of 
such  a  plant  would  be,  say,  10  per  cent,  equal  to  $20  to  $50  a  ton.     If  it 
should  cost  twice  as  much  capital  to  start  a  similar  plant  in  California, 
where  one  fortieth  as  much  product  could  be  marketed,  such  a  plant 


114  THE  COST  OF  MINING 

would  have  to  stand  additional  overhead  charges  of  $20  to  $50  a  ton. 
Such  sums  are  more  than  enough  to  pay  the  cost  of  transportation  to 
almost  any  place  in  the  civilized  world.  The  figures  are  imaginary  but 
they  are  within  reason  and  illustrate  the  principle. 

3.  The  facilities  for  manufacture  are  not  the  only  advantages  pos- 
sessed by  the  chief  industrial  areas.  They  are  also  above  the  average  in 
natural  agricultural  and  trading  resources.  The  manufactures  support 
a  population  that  is  merely  superimposed  upon  populations  that  would 
be  there  anyway.  This  adds  to  the  marketing  facilities  and  becomes 
a  factor  in  building  up  trade  from  the  mere  effect  of  momentum.  The 
widest  opportunities  for  business  lie  where  the  greatest  number  of  people 
to  do  business  with  may  be  found.  The  ambitious,  the  enterprising  and 
the  able  flock  to  the  great  industrial  centers  to  try  their  fortunes;  and 
bring  with  them  capital  and  organizing  power  that  grow  into  imposing 
volume.  In  such  centers,  hundreds  of  specialized  employments  are 
found  which  scarcely  are  known  elsewhere.  Indeed  the  greatest  cities 
are  largely  made  up  of  them.  New  York,  for  instance,  is  not  supported 
by  any  great  industry  so  much  as  by  the  specialists  of  all  industries. 

People  often  wonder  why  cotton  grown  in  the  South  is  not  manufac- 
tured in  the  South.  The  explanation  is  very  simple.  Our  Southern 
States  produce  enough  cotton  to  supply  twenty  times  the  population  of 
those  states.  Nineteen  twentieths  must  therefore  be  exported.  The 
baled  cotton  is  scarcely  more  bulky  and  can  be  handled  more  easily 
than  the  manufactured  cotton.  It  all  has  to  go  to  the  distributing  centers 
for  market:  if,  in  so  doing,  the  cotton  reaches  localities  where  it  can  be 
manufactured  more  cheaply,  advantageously  and  skilfully  than  at  home, 
that  is  the  natural  place  for  its  manufacture.  That  is  precisely  what 
happens.  Within  a  hundred  miles  of  New  York  nearly  as  many  people 
live  as  in  all  the  cotton  growing  states — a  population  infinitely  richer  in 
skilled  and  specialized  artizans,  with  infinitely  superior  commercial 
advantages.  Exactly  the  same  thing  is  true  of  other  staples;  metals 
for  instance.  Why  try  to  manufacture  copper  in  Arizona  when  it  has 
to  go  to  New  York  or  Europe  anyway?  Copper  is  used  in  conjunction 
with  iron  for  the  general  manufacture  of  machinery  appliances  and 
structures.  Eighty-three  pounds  of  iron  are  used  for  each  pound  of 
copper.  Does  not  this  fact  chain  the  copper  market  to  the  iron  produc- 
ing locality?  We  may  go  through  a  long  list  of  other  such  staples  and 
find  that  the  same  circumstances  apply  to  them  all. 

It  now  becomes  clear  why  so  much  more  money  is  to  be  found  within 
these  clearing  house  areas  than  outside.  The  commercial,  industrial 
and  financial  transactions — the  market — of  most  of  the  staples  from  the 
outside,  as  well  as  of  those  originating  inside,  are  conducted  in  these 
centers.  It  is  these  transactions  that  involve  the  principal  use  of 
money. 


THE  INDUSTRIAL  CLEARING  HOUSES  115 

The  performance  of  all  this  business  in  the  industrial  clearing  houses  is 
not  an  exaction  upon  the  rest  of  the  world — as  some  frequent  ranters 
beset  with  half  information  urge  us  to  believe — but  a  service.  It  is  a 
plain  matter  of  mutual  advantage. 

I  have  hinted  at  a  political  implication;  we  have  now  arrived  at  it. 
The  service  performed  by  these  clearing  house  areas  depends  upon  the 
free  access  to  and  free  interchange  with  all  of  the  outside  world.  Arti- 
ficial barriers,  such  as  national  antagonisms,  which  interfere  with  it,  are 
a  handicap  and  a  hardship  both  upon  those  within  and  upon  those  with- 
out. But  the  people  without  are  not  so  vitally  affected  as  those  within. 
The  industrial  areas  are  over-populated.  A  stoppage  of  their  trade 
means  starvation  and  disaster  in  the  acutest  form.  A  mere  strike  on 
the  transportation  systems  leading  to  New  York  would  bring  that 
metropolis  to  discomfort  in  a  week  and  to  black  calamity  in  a  month. 
It  is  the  province  of  true  political  organization  and  adjustment  to  recog- 
nize this  fact.  In  America  the  clearing  house  area  is  securely  backed 
by  the  political  structure  of  a  great  continent.  Its  intercourse  with  an 
immense  feeding  and  trading  area  is  as  well  assured  as  human  institu- 
tions can  make  it.  The  United  States  is  big  enough  to  command  it. 
But  it  is  the  misfortune  of  Europe  that  the  fortunes  of  the  great  indus- 
trial nations  may  be  at  any  time  endangered  by  the  jealousy  of  rivals. 
The  exploitation  of  such  jealousies  is  the  most  formidable  cause  of  war. 
The  actual  fighting  in  such  a  war  produces  only  a  small  part  of  the  suf- 
fering involved  in  it;  the  major  part  lies  in  the  economic  distress  thrust 
upon  hundreds  of  millions.  It  remains  to  add  that  the  interests  of  the 
industrial  areas  are  the  interests  of  Capitals.  They  are  the  industrial, 
social,  financial  capitals  of  the  world,  made  so  by  the  inevitable  and 
proper  working  out  of  economic  forces.  They  should  be  accorded  the 
political  privileges  of  capitals  also:  and  just  as  their  position  as  com- 
mercial capitals  rests  upon  mutual  advantage,  so  should  their  position 
as  political  capitals  rest  upon  mutual  advantage. 

How  firmly  is  this  state  of  affairs  rooted  in  natural  conditions?  In 
other  words,  how  permanent  is  it? 

ALLOCATION  OF  IRON  AND  COAL 

The  International  Geological  Congress  meeting  in  Stockholm,  Sweden 
in  1910  made  a  survey  of  the  iron  ore  resources  of  the  world  and  in  Mon- 
treal, Canada,  1913,  a  similar  survey  of  the  coal  resources  of  the  world. 
It  must  be  admitted  that  neither  of  these  reports  can  pretend  to  great 
accuracy  (1)  because  many  fields  of  both  coal  and  iron  are  only  slightly 
developed  and  therefore  the  tonnage  estimates  are  largely  conjectural, 
(2)  because  the  elements  of  known  fact  and  conjecture  are  not  reported 
in  the  same  way  for  the  different  fields  and  (3)  because  the  commercial 


116  THE  COST  OF  MINING 

factors  which  in  every  case  put  some  limit  upon  the  exploitation  of  re- 
sources are  very  imperfectly  considered.  But  in  spite  of  these  limita- 
tions certain  broad  features  of  the  world  wide  situation  stand  out  clearly 
enough  as  follows: 

COAL 

1 .  The  resources  in  both  coal  and  iron  are  distributed  very   unequally 
among  the  nations  and  races.     Thus  the  Latin  speaking  nations  both 
in  Europe,  America  and  Africa  have  very  inferior  supplies  of  coal  both 
in  quantity  and  quality. 

2.  The  territories  occupied  wholly  or  almost  wholly  by  English-speak- 
ing white  populations,  amounting  in  all  to  less  than  one-tenth  of  the 
human  race  include  not  less  than  three  quarters  of  the  probable  coal 
supplies.     The  preponderance  of  the  remaining  supply  is  in  China. 

3.  On  the  continent  of  Europe,  that  is,  excluding  the  British  Isles, 
71  per  cent  of  the  probable  resources  are  in  the  former  German  Empire. 

4.  Disregarding  the  hazy  and  uncertain  estimates  of  probable  and 
possible  coal  supplies  and  considering  only  those  portions  that  are  put 
down   as    " actual   reserve,"   the  great  coal  producing  nations  are  un- 
doubtedly well  equipped  for  the  future.     Thus  Great  Britain  has  enough 
coal  in  actual  reserve  to  maintain  its  present  output  for  approximately 
500  years,  Germany  for  400  years  and  the  United  States,  though  its 
resources  are  not  estimated  in  the  same  way,  is  undoubtedly  much  better 
off  still.     Thus  in  regions  where  coal  is  of  the  best  quality  and  demonstrat- 
ed to  be  of  present  commercial  importance,  the  output  can  certainly  be 
maintained  and  increased  for  a  period  of  at  least  100  years,  that  is,  well 
beyond  the  limits  of  reasonable  human  foresight. 

5.  On  the  other  hand  France  has  only  enough  coal  in  "  actual  re- 
serve" to  maintain  her  comparatively  modest  output  for  90  years,  Italy 
has  no  supplies  worth  mentioning;  Russia  though  credited  with  large 
potential  supplies,  has  very  little  in  actual  reserve;  Japan  has  only 
enough  to  maintain  its  present  small  output  for  90  years,  and  India 
with  its  immense  population  has  only  enough  for  30  years. 

IRON 

In  iron  the  situation  is  as  follows:  The  three  greatest  sources  of  high- 
grade  ore,  that  is,  carrying  50  to  66  per  cent,  metallic  iron,  are  the  Lake 
Superior  region  in  the  United  States,  northern  Sweden  and  south-central 
Brazil.  Immense  supplies,  measured  by  billions  of  tons  of  low  grade 
ore  running  25  to  40  per  cent,  metallic  iron  are  found  in  Great  Britain, 
France  and  Germany  near  great  fields  of  good  metallurgical  coal. 
Numerous  other  occurrence  of  fair  and  good-grade  iron  ores  occur  in  other 


THE  INDUSTRIAL  CLEARING  HOUSES 


117 


parts  of  the  world,  as  in  Spain,  Newfoundland,  Cuba,  Chili,  Mexico, 
Venezuela,  India,  China,  Australia  and  Russia,  but  these  supplies  are 
not  great  enough,  rich  enough  or  in  situations  favorable  enough  to  give 
them  at  present  commanding  commercial  or  political  importance. 

The  following  situations  seem  well  established : 

1.  The  United  States  has  enough  high-grade  iron  ore  to  guarantee  its 
present  maximum  production  of  40,000,000  tons  of  iron  a  year  for  about 
60  years,  and  if  we  may  include  the  resources  of  Cuba  as  falling  into  her 
field  she  has  enough  for  at  least  80  years.  Of  lower-grade  ores  there  is 
an  indefinite  supply.  By  high-grade  we  must  understand  ores  yielding 
at  least  50  per  cent,  metallic  iron  on  the  average.  In  the  Lake  Superior 
district  there  is  at  least  2,000,000  tons  of  such  ore  perfectly  developed 
and  forming  the  back  bone  of  the  industry.  These  ores  are  situated  at 
an  average  distance  of  about  900  miles  from  the  greatest  fields  of  metal- 
lurgical coal  in  the  world,  but  connected  with  them  by  a  singularly  easy 
transportation  route  through  the  Great  Lakes.  This  makes  the  natural 
meeting  point  of  ore  and  fuel  coincide  with  the  center  of  population, 
and  of  natural  trade  distribution  of  the  North  American  continent,  and 
gives  the  industry  based  on  these  factors  an  unrivalled  strategic  position 
for  controlling  the  greatest  market  of  the  world.  This  had  led  to  iron 
being  manufactured  by  larger  productive  units  and  no  doubt  under  con- 
ditions which  yield  a  greater  output  per  man  than  is  possible  in  any 

ACTUAL  IRON  ORE  RESERVES  OF  PRINCIPAL  IRON  MANUFACTURING  COUNTRIES 


Ore,  tons 

Metallic  iron 

Per  cent. 

France 

3,300,000,000 
711,000,000 
250,000,000 
33,000,000 
864,000,000 
1,158,000,000 
1,300,000,000 
3,607,000,000 

1,140,000,000 
349,000,000 
90,000,000 
13,000,000 
387,000,000 
740,000,000 
455,000,000 
1,270,000,000 

37, 
50  ' 
36 
40 
44 
65 
35 
35  J 

Self  flux. 

>  Europe,  40% 
100  years  sup- 

piy- 

Self  flux. 

Spain                              

Austria 

Hungary                          "  .    ... 

Russia  in  Europe  
Sweden 

Great  Brigain  
Germany  

Total  
United  States  

11,223,000,000 
4,257,000,000 

3,635,000,000 
1,903,000,000 
5,000,000,000 
135,000,000 
100,000,000 
100,000,000 
44,000,000 

4,444,000,000 
2,300,  000,000 

53% 

Newfoundland 

1,961,000,000  ] 
856,000,000  f 
3,000,000,000  J 
73,000,000 
65,000,000 
60,000,000 
28,000,000 

For  export  only. 
For  export  only. 
60% 

Practically       unex- 
plored. 

Cuba  

Brazil  

Australia 

British  Isles  
Chna  

Japan  

118  THE  COST  OF  MINING 

other  field.  Under  these  conditions  the  United  States  should  be  able  to 
command  a  considerable  exportation  of  iron  to  countries  in  which  iron 
manufacture  is  either  imperfectly  developed  or  not  feasible. 

2.  Germany  or  at  least  the  territory  in  which  German  is  spoken  has 
supplies  of  ore  averaging  only  about  35  per  cent,  in  metallic  iron,  but 
having  the  three  great  advantages  (1)  of  being  mainly  self  fluxing,  (2) 
of  having  a  favorable  texture  for  both  cheap  mining  and  cheap  smelting 
and  (3)  of  being  close  to  great  fields  of  metallurgical  coal.     Of  these  ores 
she  had  within  her  previous  borders  enough  to  maintain  her  maximum 
output  of  20,000,000  tons  a  year  for  60  years.     If  we  may  credit  the 
Germans  with  ability  to  import  half  the  Swedish  supply,  half  the  French 
supply  (which  is  an  immediate  continuation  of  her  own  principal  field) 
and  one  quarter  of  the  Spanish  supply,  it  is  easy  to  see  how  she  can  main- 
tain her  output  under  conditions  approximately  as  favorable  as  the  pres- 
ent for  100  years  to  come.     Since  this  manufacture  is  near  the  center  of 
European  population,  from  which  radiate  favorable  transportation  routes 
both  by  land  and  water,  the  Germans  seems  well  equipped  to  dominate 
the  markets  of  central  Europe  indefinitely.     It  would  seem  as  if  these 
factors  gave  them  the  second  position  both  as  to  natural  conditions  and 
as  to  markets. 

3.  Great  Britain  held  the  leadership  of  the  iron  trade  until  about  1890, 
but  since  that  time  she  has  been  outstripped  first  by  the  United  States 
and  then  by  Germany.     It  is  thought  that  she  has  been  slow  to  adopt 
modern  intensive  methods  of  manufacture,  but  it  is  probable  that  her 
decline  is  based  rather  on  the  fact  that  her  home  market  is  less  extensive 
than  those  of  her  chief  competitors.     In  the  export  trade  she  is  still  a 
formidable  competitor  for  any  rival.     Her  natural  factors  seem  to  be 
rather  superior  to  those  of  Germany  in  coal  and  rather  inferior  in  iron 
and  her  access  to  over  sea  markets  is  more  secure  than  that  of  Germany, 
even  in  peace  times.     Her  indigenous  ores  are  estimated  to  guarantee  her 
present  output  of  about  10,000,000  tons  a  year  for  45  years  and  if  she  can 
import  half  of  the  Spanish  supply,  one  quarter  of  the  Swedish  supply  and 
a  fair  amount  from  Newfoundland,  it  is  easy  to  see  how  Great  Britain 
also  can  maintain  her  present  output  under  conditions  practically  as 
favorable  as  the  present,  for  100  years. 

From  these  brief  analyses  I  take  it  to  be  a  fair  conclusion  that  the 
three  great  industrial  nations  are  well  equipped,  so  far  as  the  basic  raw 
materials,  coal  and  iron,  are  concerned,  to  maintain  their  present  lines 
of  development  well  into  the  immediate  future.  It  remains  to  analyse 
the  situation  of  other  nations  to  see  how  far  they  are  likely  to  challenge 
the  industrial  position  of  the  present  leaders.  For  a  probable  source  of 
such  a  challenge  it  is  natural  to  turn  first  to  Russia. 

This  great  country  possessed  in  a  solid  block  one-sixth  of  the  land 
surface  of  the  world  and  one-tenth  the  population.  While  that  popula- 


THE  INDUSTRIAL  CLEARING  HOUSES  119 

tion  is  probably  less  homogeneous  than  that  of  the  United  States,  we 
may  assume  that  it  is  much  more  homogeneous  than  several  other  great 
empires.  When  we  come  to  its  resources  we  find  that  it  is  more  nearly 
analogous  to  Canada  than  to  the  United  States.  At  least  one-half  of  its 
area  is  north  of  a  line  beginning  at  a  latitude  of  60°  North  at  the  western 
frontier  and  ending  at  50°  North  at  the  Pacific.  This  area  is  no  more 
capable  of  maintaining  dense  population  than  that  part  of  Canada  which 
lies  north  of  a  line  beginning  at  Skagway,  Alaska  and  ends  in  Labrador. 
Another  large  part  of  its  area  is  the  desert,  or  semi-desert  lying  east  of  the 
Caspian.  Thus  from  the  standpoint  of  habitability  Russia  is  a  long 
monotonous  strip  of  plain,  widest  at  its  extreme  west  and  gradually 
narrowing  between  the  encroachments  of  an  arctic  climate  on  the  north 
and  mountains  and  deserts  at  the  south,  until  before  Asia  is  crossed 
it  comes  to  an  end.  Outside  of  these  limits  Russia  presents  various 
conditions  varying  from  those  of  our  Nevada  deserts  to  those  of  Cockburn 
land.  Thus  in  agricultural  land  and  possibly  in  forests  Russia  is  about 
twice  as  big  as  Canada;  but  in  commercial  routes,  and  in  those  resources 
which  promote  industrial  activity  it  is  relatively  inferior. 

According  to  the  investigations  of  the  International  Geological 
Congress  Russia  both  in  Asia  and  Europe  has  scarcely  one-sixth  as  much 
coal,  and  if  we  may  include  Newfoundland  with  Canada,  less  iron. 
Though  her  iron-ore  reserves  are  ample  to  maintain  her  present  output 
for  100  years,  she  is  relatively  no  better  off  than  the  present  industrial 
leaders.  The  known  ore  reserves  average  about  44  per  cent,  metallic 
iron.  These  conditions  do  not  indicate  that  Russia  is  in  a  position  to 
bring  about  any  revolutionary  change  in  the  industrial  world.  Her 
production  of  coal  and  iron  as  compared  with  other  countries  has  not  been 
improving  very  fast.  Thus  in  1850  Russia  with  an  output  of  230,000 
metric  tons  of  pig  iron  was  the  sixth  in  the  list  of  producers,  in  1913 
the  last  year  in  which  figures  are  available  undisturbed  by  the  war, 
with  548,000  metric  tons,  she  was  fifth.  In  1850  the  United  States 
producing  573,000  tons  was  second  on  the  list;  in  1913,  with  31,482,406 
tons  she  was  first.  In  1850  Germany  produced  354,000  tons  and  was 
fourth;  in  1913  she  produced  19,292,000  and  was  second.  Thus  while 
Russia  has  increased  her  production  20  fold,  the  United  States  and 
Germany  have  each  increased  theirs  55  fold.  From  1900  to  the  out- 
break of  the  war  Russia  had  increased  her  output  more  than  55  per  cent., 
the  United  States  and  Germany  each  126  per  cent.,  France  95  per  cent., 
Canada  1074  per  cent.,  Belgium  144  per  cent.,  and  Great  Britain  has 
remained  practically  stationary.  These  figures  represent  Russia's 
industrial  progress,  I  should  imagine,  as  well  as  any  others;  for  modern 
industry  means  the  use  of  machinery  and  the  manufacture  of  iron  the 
manufacture  of  machinery.  That  a  country  with  such  resources  is 
able  to  do  more  than  it  has  in  the  past  may  be  taken  for  granted  but 


120  THE  COST  OF  MINING 

how  much  more  is  questionable,  particularly  in  view  of  the  present  and 
prospective  political  and  industrial  unrest,  and  the  disintegration  of  the 
country  into  smaller  units.  And  when  we  consider  how  long  a  road 
she  must  travel  to  equal  even  the  present  industrial  activity  of  the  great 
western  nations,  one  is  tempted  to  doubt  if  we  are  warranted  in  ex- 
pecting it.  I  feel  almost  convinced  that  Russia  will  never  be  able  to 
match  either  of  the  three  great  leaders,  and  certainly  not  the  United 
States. 

In  Japan  we  find  an  energetic  and  intelligent  people  living  upon  an 
already  over-populated  group  of  islands  and  exceedingly  ambitious 
to  join  in  competition  with  the  industrial  nations  of  Europe  and  America. 
So  far  as  reserves  of  coal  and  iron  are  concerned  we  see  from  the  tables 
given  herewith  that  she  is  hopelessly  inferior  to  any  of  the  big  com- 
petitors just  discussed.  However,  in  Korea,  Manchuria  and  China 
she  may  find  the  raw  materials  for  industrial  expansion.  Whether  she 
can  so  utilize  the  enormous  coal  resources  of  China  and  the  probably  great 
iron  resources  of  eastern  Asia  that  she  can  build  up  an  industrial  system 
to  match  those  of  Europe  and  America  (no  doubt  a  possibility  from  the 
standpoint  of  natural  and  human  material,  and  routes  for  assemblage 
and  distribution  with  reference  to  a  great  population  which  might  one 
day  afford  a  great  market)  is  an  enormous  problem  of  politics  as  well  as 
of  economics.  It  will  be  a  fascinating  and  exceedingly  difficult  task  and 
well  worth  the  effort  for  only  by  success  in  this  direction,  whether  under 
the  leadership  of  the  Japanese  or  of  the  Chinese,  can  we  see  any  hope  of 
rescuing  the  great  yellow  races  from  the  distressing  poverty  which  now 
holds  their  great  inherent  energy  inertly  anchored  to  thfe  soil.  Capital, 
intercommunication,  education,  freedom,  organizing  capacity  and 
political  power  all  spring  from  the  same  source,  productive  power.  Once 
securely  growing  we  may  imagine  that  industrial  energy  in  that  field  may 
acquires  enormous  force. 

We  must  remember  that  national  growth  and  power  are  not  wholly 
measured  in  military  terms,  though  I  have  shown  that  military  power  to 
be  stable  must  be  based  upon  industrial  power.  The  greatest  value  of 
industrial  power  lies  in  the  fact  that  it  means  prosperity.  The  owner- 
ship of  vigorous  industry  is  not  wholly  dependent  upon  natural  resources, 
because  human  ability  can  overcome  obstacles,  but  that  ownership  is 
exceedingly  important.  The  virile  nations  of  the  present  day  and  of  the 
immediate  future  will  undoubtedly  scrutinize  their  mineral  resources, 
among  other  things,  with  closer  attention  than  ever. 

WORLD'S  PRODUCTION 

The  world's  production  of  iron  and  steel,  so  far  as  data  are  available, 
is  noted  in  the  accompanying  tables: 


THE  INDUSTRIAL  CLEARING  HOUSES 


121 


PIG-IRON  PRODUCTION  OF  THE  WORLD 
(In  metric  tons) 


Year 

Austria- 
Hungary 

Belgium 

Canada 

France 

Germany 

Italy 

Japan 

1908  

1,650,000 

1,206,440 

572,284 

3,391,150 

11,813,511 

112,924 

1909  

1,958,786 

1,632,350 

686,886 

3,632,105 

12,917,653 

207,800 

1910  

2,010,000 

1,852,090 

726,471 

4,032,459 

14,793,325 

215  000 

1911  
1912  

2,095,000 
2,312,689 

2,046,280 
2,301,290 

832,376 
920,636 

4,426,469 
4,871,992 

15,280,527 
17,852,571 

302,931 
379,987 

53,065 
56  341 

1913  

2,369,864 

2,484,690 

1,024,424 

5,311,316 

19,291,920 

426,775 

56  663 

1914 

2  020  000 

1  454  400 

710  481 

5  025  000 

14  389  547 

385  114 

74  055 

1915 

1,960  000 

68  150 

828  920 

4  750  000 

11  790  199 

377  510 

64  984 

1916 

2  418,322 

127  825 

1  060  787 

1,447  000 

13  314  238 

467  005 

77  283 

1917 

7.990 

1,063  084 

1,684  000 

13,142  247 

471  180 

1918 

nil  . 

1,084,642 

1,297,000 

11,754  542 

313  576 

Year 

Russia 

Spain 

Sweden 

United 
Kingdom 

United 
States 

All  other 
countries 

Total 

1908 

2,748,000 

403,500 

563,300 

9  438  477 

16,190,994 

550,000 

48,640,419 

1909 

2,871,332 

389,000 

443,000 

9,818,916 

26,108,199 

550,000 

61,217,064 

1910 

3,042,046 

367,000 

604,300 

10,380  723 

27,636,687 

525,000 

66,210,720 

1911  
1912  
1913 

3,521,000 
4,197,638 
4,548,376 

408,667 
403,243 
424,773 

633,800 
701,900 
735,000 

9,718,638 
8,751,464 
10,481,917 

34,027,940 
30,202,568 
31,482,406 

485,000 
485,000 
495,000 

73,831,693 
73,443,043 
79,133,124 

1914  
1915  

4,261,008 
3,696,560 

425,000 
439,835 

635,100 
767,600 

9,005,898 
8,793,659 

23,721,115 
30,414,817 

420,000 
415,000 

62,536,718 
64,367,234 

1916  
1917  
1918 

3,737,593 
3,000,000 

497,726 
357,699 
386  550 

737,300 
821,200 
749  800 

9,193,656 
9,572,190 
9  184  974 

40,092,043 
39,243,018 
39  677  728 

425,000 

73,595,778 

STEEL  PRODUCTION  OF  THE  WORLD, 
(In  metric  tons) 


Year 

Austria- 
Hungary 

Belgium 

Canada 

France 

Germany 

Italy 

Japan 

1908 

2  025  182 

1  065  500 

534  631 

2  727  717 

10,480  349 

537,000 

1909  
1910 

1,969,538 
2  1  RR  ^71 

1,370,000 
1  449  500 

684,677 
745  971 

3,034,571 
3  506  497 

12,049,834 
13  698  638 

661,600 
635  000 



1911  
1912  
1913  

2,363,008 
2,785,105 
2,682,619 

2,192,630 
2,515,040 
2,466,630 

800,504 
868,811 
1,060,503 

3,680,613 
4,078,352 
4,686,866 

15,019,333 
17,301,998 
18,958,819 

736,000 
801,951 
846,085 

10,222 
12,451 
13,728 

1914  

2,190,759 

1,396,300 

751,738 

2,655,854 

15,619,719 

796,152 

15,386 

1915 

2  686  226 

98,820 

926,157 

1,087,700 

13,237,646 

1,009,240 

16,766 

1916  

3,340,000 

99,371 

1,295,707 

1,951,892 

16,182,520 

1,269,486 

23,861 

1917  

2,920,000 

9,530 

1,583,786 

2,231,651 

16,587,360 

1,331,641 

1918  

1,763,745 

10,540 

1,699,886 

1,807,931 

13,756,813 

992,523 

122 


THE  COST  OF  MINING 


Year. 

Russia. 

Spain. 

Sweden. 

United 
Kingdom. 

United 

States. 

All  Other 
Countries. 

Total. 

1909 

3,071,000 

309,479 

310,600 

5,976,322 

24,338,302 

325,000 

53,499,974 

1910 

3,479,000 

316,301 

468,600 

6,477,110 

26,512,437 

315,000 

58,656,312 

1911 

3,870,000 

322,981 

456,500 

6,565,645 

24,054,918 

315,000 

60,387,354 

1912 

4,498,000 

317,880 

508,300 

6,904,546 

31,751,324 

325,000 

72,668,758 

1913 

4,827,000 

365,118 

582,700 

7,787,264 

31,822,555 

325,000 

76,157,262 

1914 

4,732,000 

382,044 

500,600 

7,918,243 

23,904,914 

300,000 

61,163,709 

1915 

4,900,000 

387,314 

588,800 

8,687,670 

32,686,887 

300,000 

66,613,226 

1916 

4,696,000 

322,931 

717,600 

9,344,520 

43,462,336 

320,000 

83,026,332 

1917 

3,000,000 

470,241 

681,700 

9,909,338 

45,786,083 

350,000 

84,894,119 

1918 

303,206 

524,800 

10,434,059 

45,178,307 

PRODUCTION  OP  PIG-!RON  IN  PRINCIPAL  COUNTRIES  IN  1850,  1890,  1900,  AND 
1910-1912,  IN  LONG  TONS 


Country 

1850 

1890 

1900 

1910 

1911 

1912 

United  States  

563,755 

9,202,703 

13,789,242 

27,303,567 

23,649,547 

30,506,047 

Germany  

350,000 

4,584,882 

8,381,373 

14,559,509 

15,404,648 

17,586,521 

Great  Britain  

2,300,000 

7,904,214 

8,959,691 

10,012,098 

9,718,638 

8,839,124 

France  

405,653 

1,931,188 

2,669,966 

3,974,478 

4,309,498 

4,870,913 

Russia  

227,555 

912,561 

2,889,789 

2,992,058 

3,531,807 

4,133,000 

Austria-Hungary  

250,000 

910,685 

1,472,695 

2,153,788 

2,056,839 

2,276,141 

Belgium  

144,452 

775,385 

1,001,872 

1,822,821 

2,072,836 

2,307,853 

Canada  

19,439 

86,090 

740,210 

824,368 

912,878 

Sweden  

150,000 

483,155 

518,263 

594,385 

624,367 

688,757 

Spain  

176,598 

289,315 

367,423 

402,209 

a400,000 

Italy  

14,094 

23,569 

347,657 

298,144 

373,960 

Japan  

186,794 

o200,000 

o200,000 

Other  countries 

10,000 

80,000 

100,000 

a250,000 

a200,000 

a200,000 

Total  

4,401,415 

26,994,904 

40,181,865 

63,304,788 

63,342,901 

72,566,084 

a  Estimated.     Estimate  for  1913,  76,000,000  long  tons. 


CHAPTER  IX 

LAKE  SUPERIOR  IRON.     OLD  RANGES 

AREA  OF  LAKE  SUPERIOR  IRON  REGION — THE  HURONIAN  OR  ALGONKIAN  CYCLE  OP 

WORLD  HISTORY THE  POST  ALGONKIAN  MOUNTAIN  RANGE — DISTRIBUTION  OF 

THE    IRON    FORMATION — ITS    EXTRAORDINARY   VOLUME — OUTPUT   OF   VARIOUS 
RANGES ECONOMIC  RESULTS  IN  THE  MICHIGAN  DISTRICTS. 

Patches  or  " Ranges"  of  silicious  iron  bearing  rock  of  Algonkian  age 
are  scattered  over  a  large  area,  from  Escanaba  on  Lake  Michigan  west- 
ward to  beyond  the  Mississippi  near  Brainerd,  Minnesota,  350  miles; 
and  from  Baraboo  in  southern  Wisconsin  to  Gunflint  Lake  on  the  Canad- 
ian border  of  Minnesota,  300  miles.  A  line  looped  loosely  around  these 
points  encloses  an  area  of  some  75,000  square  miles,  a  good  deal  of  which 
is  occupied  by  the  waters  of  Lake  Superior  and  by  small  lakes. 

Within  this  area  the  natural  exposures  of  the  iron  formation  or  even  of 
the  rock  formation,  the  Huronian  series,  that  contains  them,  are  small, 
he  Huronian  rocks  are  covered  in  large  part  by  the  lakes,  and  equally 
by  the  volcanic  masses  of  the  Keweenawan  copper  bearing  series,  also 
pre-Cambrian  in  age,  by  Paleozoic  sediments,  and  by  glacial  drift  with 
its  accompanying  bogs.  They  have  also  been  worn  through  in  many 
places  exposing  the  still  older  Archaean  cores  of  old  anticlines.  These 
circumstances  added  to  the  fact  that  these  rocks  are  metamorphosed  and 
contorted  in  violent  contrast  to  those  that  occupy  the  surface  of  the 
adjacent  regions,  are  a  sufficient  explanation  of  the  obscurity  and  diffi- 
culty of  the  geology.  The  unraveling  of  it  has  been  a  slow  process  in 
which  observers  have  often  been  unable  to  dissociate  theories  from  the 
facts.  There  has  been  intensive  study  of  particular  districts  in  the 
effort  to  unravel  special  complexities  and  only  an  occasional  attempt 
to  describe  the  geology  of  the  region  as  a  whole.  I  shall  try  no  more  than 
to  set  down  a  few  of  the  salient  facts  that  are  not  open  to  controversy. 

The  Algonkian  plainly  represents,  as  mentioned  above  in  the  chapter 
on  coal,  a  major  cycle  of  sedimentation  and  quiescence,  sharply  marked 
from  the  preceding  Archaean  and  the  following  Paleozoic  by  world  wide 
crustal  readjustments  or  " revolutions."  Both  in  this  region  and  in 
other  parts  of  the  continent  the  observer  is  soon  convinced  of  their  grand 
scale;  perhaps  there  is  a  tendency  to  be  over-impressed  by  it.  Only  in 
the  Appalachian  border  on  the  east  and  in  the  Great  Basin  border  on  the 
west  does  the  Paleozoic  succession  equal  the  imposing  sedimentary 
masses  of  the  Huronian  series  of  the  Lake  Region,  or  the  Belt  series  of  the 

123 


124 


THE  COST  OF  MINING 


west,  which  are  no  doubt  more  or  less  coeval.  But  I  think  we  may  safely 
conclude  that  the  great  thickness  of  the  Huronian  and  Belt  strata  are  due 
to  precisely  the  same  reason  that  makes  the  Paleozoic  thick  in  Penn- 


sylvania  and  the  Cretaceous  thick  in  Colorado — they  are  remnants  of 
great  troughs  or  continental  borders  of  active  sedimentation  and  sub- 
sidence. The  deeper  portions  of  these  troughs  are  in  general  the  portions 


LAKE  SVPERIOR  IRON.     OLD  RANGES  125 

that  are  preserved  and  exposed,  and  to  which  attention  has  been  partic- 
ularly drawn;  the  scantier  Algonkian  sediments  that  probably  were 
formed  elsewhere  having  been  more  generally  removed  by  erosion,  and, 
either  much  less  observed,  or  probably  in  many  places  confused  by  ob- 
servers with  later  formations.  The  Huronian  of  Lake  Superior  is  in 
general  very  much  like  the  Paleozoic  of  the  Appalachian  trough;  the 
resemblances  preponderate  greatly  over  the  divergences.  The  Paleozoic 
does  not  represent  a  continuous  deposition  of  sediment;  it  is  interrupted 
by  several  unconformities  or  erosion  intervals.  The  Huronian  in  the 
iron  region  is  exactly  the  same;  it  is  interrupted  by  two  erosion  intervals 
or  moderate  unconformities  which  affect  different  parts  of  the  area  very 
differently  and  change  the  succession  of  rocks  from  place  to  place.  The 
rocks  are  such  as  are  usually  found  in  areas  of  persistent  and  active  sedi- 
mentation, consisting  in  both  cases  very  largely  of  sandstones  and  shales 
with  limestones  rather  subordinate  in  volume.  The  Huronian  is  not 
nearly  so  rich  in  limestone  as  the  Appalachian  trough,  but  it  contains 
nevertheless  large  masses  of  it. 

Within  the  area  we  are  considering  the  peculiar  "iron  formations" 
were  deposited  apparently  exactly  in  the  manner  of  normal  limestones, 
making  huge  masses  of  strata  as  much  as  1400  feet  thick,  undoubtedly 
in  lenses  the  largest  of  which  may  have  covered  originally  10,000  or  15,000 
square  miles.  Many  attempts  have  been  made  to  explain  the  formation 
of  these  iron  bearing  sediments,  but  none  seems  to  be  wholly  convincing; 
suffice  it  to  say  that  they  were  certainly  formed  in  clear  sea  water  as 
limestones  form;  the  deposition  being  interrupted  occasionally  by  inva- 
sions of  mud,  which  in  some  cases  represent  wide-spread  suspensions  of 
the  iron  deposition,  perhaps  from  failure  of  the  supply  of  iron  bearing 
material;  or  perhaps  representing  a  proximate  filling  of  the  basin  so  that 
waves  and  currents  had  more  power  to  spread  silts.  At  any  rate  in  each 
case  the  clear-water  basins  were  finally  filled  and  great  shale  deposits, 
apparently  of  delta  mud,  were  formed  over  them;  just  as  in  many  other 
places  great  masses  of  shale  have  formed  over  lime-stones,  representing 
the  substitution  of  low  plains  or  muddy  shore  lines  for  shallow  clear- 
water  seas.  Many  of  the  Huronian  shales  are  exceedingly  carbonaceous, 
containing  beds  of  graphite,  so  that  it  is  not  improbable  that  the  old 
deltas  contained  peat  swamps,  although  the  vegetable  forms  have  been 
obliterated  by  the  widespread  metamorphism. 

The  original  position  of  the  Huronian  trough  is  largely  guess-work. 
The  present  distribution  of  the  rocks,  not  improbably,  was  determined 
more  by  the  later  mountain-building  forces  than  by  the  original  deposi- 
tion. Still  there  is  fair  reason  to  believe  that  the  longer  axis  of  the 
trough  ran  approximately  east  and  west,  for  numerous  fragments  of 
it  occur  all  the  way  from  Sioux  Falls,  South  Dakota,  to  north  central 
Quebec,  thirteen  hundred  miles,  but  the  greatest  width  indicated  is  only 


126  THE  COST  OF  MINING 

300  miles  north  and  south.  Indeed  there  is  nothing  radical  in  the  suppo- 
sition that  this  trough  extended  westward  north  of  the  Black  Hills,  into 
Montana,  Idaho,  and  California,  on  the  west  and  to  New  Jersey,  where 
there  is  a  thick  mass  of  Algonkian  limestone,  or  perhaps  more  directly 
to  Newfoundland,  to  the  east.  This  extension  at  the  greatest  would  not 
make  it  as  large  as  the  Upper  Cretaceous  trough  which  extended  from 
the  Gulf  to  the  Arctic  Ocean.  At  any  rate  it  is  clear  that  in  some  such 
area  there  was  a  broad  low-lying  plain  never  far  above  and  never  far  below 
sea  level,  that  was  filled  partly  by  chemical  deposits  in  shallow  sea  water, 
but  principally  by  shore  sands  and  river  silts  washed  in  from  one  or  both 
sides. 

The  peculiar  chemically-deposited  iron  formations  seem  to  have  been 
either  cherty  iron  carbonates  or  unstable  iron  silicates,  in  all  cases  con- 
taining at  least  50  to  60  per  cent,  silica  and  averaging  from  25  to  35  per 
cent.  iron. 

While  the  geography  of  Huronian  deposition  is  decidedly  conjectural, 
the  succeeding  "  re  volution"  presents  some  points  that  are  well  estab- 
lished; the  earth  movements  affected  the  whole  world,  the  North  Ameri- 
can continent  was  elevated  and  suffered  a  period  of  erosion  more 
prolonged  and  widespread  than  in  any  time  since.  However,  the  differ- 
ences between  this  event  and  succeeding  ones  may  easily  be  exaggerated ;  in 
fact  it  is  hard  to  point  to  anything  that  has  not  been  repeated  or  paralleled 
in  later  times.  It  is  perfectly  plain  that  a  first  class  mountain  building 
movement  cut  through  the  heart  of  the  former  trough.  Very  possibly 
the  new  mountain  range  split  the  old  basin  longitudinally  as  the  Front 
Range  splits  the  Cretaceous  trough,  but  that  point  is  doubtful;  it  may 
cross  it  at  an  angle.  At  any  rate  a  mountain  range  comparable  to  any 
of  the  present  great  mountain  ranges,  the  Alps  for  instance,  was  formed 
along  an  axis  that  runs  some  distance  south  of  Lake  Superior,  almost 
parallel  to  it,  in  an  E-W  or  E-N-E  direction.  The  mountain  building 
axis  was  of  course  not  a  line  but  a  broad  belt  sweeping  across  the  northern 
part  of  Wisconsin  and  Michigan.  The  edge  or  front  of  this  range  can 
be  accurately  located  today  for  a  considerable  stretch,  namely  from  the 
Huron  Islands  at  the  mouth  of  Keweenaw  Bay,  through  L'Anse,  Lake 
Gogebic,  and  along  the  Gogebic  iron  range  to  its  west  end,  160  miles. 
North  of  this  line  there  is  merely  a  basin  in  which  the  rocks  are  gently 
folded,  apparently  by  mere  subsidence;  south  of  it  there  is  a  broad  belt 
of  intense  folding,  faulting  and  batholithic  intrusions.  The  whole  mass 
of  Huronian  sediments  on  the  Gogebic  Range  is  merely  tilted  up  against 
the  side  of  the  uplift  and  thus  marks  its  position  just  as  plainly  as  the 
tilted  Cretaceous  sediments,  along  the  Front  Range  mark  the  edge  of  the 
Rocky  Mountains. 

Along  the  mountain  range  itself  the  uplift  was  sufficient  to  bring  the 
underlying  Archaean  above  the  level  of  subsequent  erosion  over  a  good 


LAKE  SUPERIOR  IRON.     OLD  RANGES  127 

part  of  the  range.  The  iron  bearing  rocks  within  the  ancient  mountain 
zone  are  found  only  in  a  series  of  synclines  which  in  each  case  represented 
at  one  time  a  longitudinal  mountain  valley.  These  folds  are  very  sharp, 
and  metamorphism  has  been  in  places  complete,  so  that  now  many  of 
the  sediments  have  become  crystalline  schists.  The  whole  country, 
by  the  way,  was  almost  base-leveled  by  erosion  before  upper  Cambrian, 
or  Ordovician,  times  and  has  remained  singularly  quiescent  ever  since. 

There  is  nothing  mysterious  or  unprecedented  about  any  of  these 
facts:  for  instance  the  Ordovician  strata  (which  in  Lake  Superior  are 
completely  undisturbed)  on  Manhattan  Island  are  metamorphosed 
into  the  " Hudson  Schists"  which  every  stroller  sees  in  Central  Park, 
and  these  rocks  are  as  tightly  folded,  as  thoroughly  crystalline,  as  com- 
pletely base-leveled,  as  any  in  Lake  Superior  and  represent  a  similar 
mountain  system.  Jurassic  strata,  much  later  still,  are  just  as  thoroughly 
affected  along  the  Coast  Range,  and  the  Sierra  Nevada  in  California. 
Perhaps  the  nearest  parallel  afforded  by  later  geological  structures  to 
the  present  Huronian  of  Lake  Superior  is  the  mid-Paleozoic  mountain 
range,  now  pretty  effectively  base-leveled,  that  extends  from  New  York 
City  northward  through  western  Connecticut,  Massachusetts,  and 
Vermont,  past  Lake  Champlain  to  the  neighborhood  of  Quebec,  for  a 
length  of  500  miles,  and  an  unknown  distance  south  along  the  present 
Atlantic  border. 

The  iron  deposits  are  not  peculiar  to  Huronian  time,  for  some  of  them 
belong  to  the  antecedent  Archaean.  Algonkian  rocks  in  other  areas  are 
as  free  from  iron  as  any  others.  The  iron  ores,  therefore,  belong  to  the 
region  much  more  emphatically  than  to  the  age.  There  has  been  decidedly 
too  strong  a  tendency  to  assume  that  jaspery  masses  containing  hematite 
or  magnetite^in  the  pre-Cambrian  regions  of  Canada  are  " Huronian." 
Some  of  them  may  be,  but  I  have  seen  many  of  them  in  various  places 
belonging  to  various  ages  that  seem  to  be  vein-like  silicifications,  and 
of  course  have  not  the  slightest  connection  with  the  great  sedimentary 
formation  of  the  Algonkian.  It  seems  worth  while  to  emphasize  that 
the  sedimentary  character  of  this  series  is  not  only  unmistakable,  but 
quite  normal,  so  that  every  rock  and  every  attitude  in  it  can  easily  be 
duplicated  in  the  formations  of  later  times  in  all  parts  of  the  world.  It 
is  only  the  extraordinary  volume  of  the  iron  that  is  unique.1 

The  Iron  Ores. — I  have  ventured  to  give  this  rough  sketch  of  the 
geological  history  of  the  Huronian  believing  that  it  would  give  a  more 
comprehensive  idea  of  the  country  in  a  few  words  than  could  be  conveyed 
by  a  description  of  the  various  mining  districts  that  are  found  in  it. 

1  In  the  following  references  to  Lake  Superior  geology,  I  am  following  the  recent 
conclusions  of  R.  C.  Allen,  until  recently  head  of  the  Michigan  Geological  Sur- 
vey. So  far  as  I  am  warranted  in  having  a  personal  opinion  I  believe  this  work  of 
Dr.  Allen's  to  be  sound  and  his  deductions  essentially  probable. 


128  THE  COST  OF  MINING 

These  districts  are  called  "  Ranges,"  quite  appropriately  in  some  cases, 
not  so  much  so  in  others.  All  of  these  ranges,  omitting  the  unimportant 
one  at  Baraboo,  Wisconsin,  and  the  Vermillion  in  Minnesota,  which  is 
not  of  Huronian  age  but  Archaean,  lie  in  a  zone  running  from  Escanaba, 
Michigan  to  Grand  Rapids,  Minnesota,  350  miles  in  a  straight  line.  All 
the  occurrences  of  iron  formation,  of  any  consequence  are  found  within 
50  miles  north  or  south  of  this  line.  There  is  thus  some  suggestion  that  this 
zone  may  have  been  the  locus  of  the  peculiar  iron  deposition,  especially 
in  the  more  important  middle  Huronian  division  of  it.  The  middle 
line  I  have  mentioned  passes  immediately  along  the  Menominee  Range 
where  the  iron  formation  occurs  in  a  number  of  sharply  compressed 
folds,  goes  through  the  heart  of  the  Crystal  Falls  and  Iron  River  districts 
where  it  occurs  in  a  lens  or  lenses  included  in  folded  carbonaceous  slates, 
bisects  the  immense  mass  of  the  Gogebic  Range,  a  monocline  dipping 
under  thousands  of  feet  of  overlying  slate  and  more  thousands  of  feet 
of  copper  bearing  eruptives  at  an  angle  of  60°  toward  Lake  Superior, 
and  cuts  into  the  western  end  of  the  still  greater  mass  of  the  Mesabi. 
These  ranges  might  therefore  be  called  the  central  ranges  and  they 
produce  almost  90  per  cent,  of  the  ore  of  the  whole  field.  The  Marquette 
Range,  some  fifty  miles  to  the  north,  produces  most  of  its  ore  from  a 
large  fragment  of  the  Huronian  iron  formation,  similar  in  all  respects 
to  the  main  formation  of  the  other  ranges,  but  eroded  more  extensively 
before  the  succeeding  upper  series  was  laid  down  upon  it. 

It  occupies  an  E.  W.  syncline  about  six  miles  in  maximum  width 
running  westward  some  forty  miles  from  Marquette,  on  the  shore  of  the 
lake,  between  boundaries  of  Archaean  granite  until  it  debouches  into  a 
large  folded  area  of  Upper  Huronian  slate.  In  this  district  the  iron 
formation  occurs  principally  in  the  patch  of  " Middle  Huronian"  in 
the  central  part  of  this  trough;  that  in  the  upper  series  occurs  probably 
as  isolated  or  marginal  lenses  in  carbonaceous  slates  toward  the  west  end 
of  the  trough.  The  Cuyuna  Range  is  only  partially  developed.  It 
lies  40  or  50  miles  south  of  the  axial  line  and  it  too  shows  great  masses  of 
iron  formation  enclosed  between  slates  and  plicated  in  various  E-N-E 
folds. 

The  Gogebic  and  Mesabi  Ranges  are  by  far  the  greatest  and  the  simplest 
of  all.  They  do  not  lie  in  compressed  folds  at  all  like  the  others  but 
merely  dip  under  the  great  Lake  Superior  trough  from  opposite  sides — 
the  Gogebic  steeply  to  the  north,  60°  or  more,  the  Mesabi  nearly  flat, 
say  5°  to  the  south.  Although  these  masses  are  140  miles  apart  at  their 
centers  there  is  reason  to  suppose  that  they  may  be  the  same  beds.  If 
so  the  amount  of  iron  contained  in  the  intervening  basin  under  the  western 
prong  of  Lake  Superior  is  simply  staggering.  The  area  of  this  section  is 
some  8,000  square  miles,  at  that  only  a  part  of  the  original  deposit,  and  if 
it  ^averages  only  400  feet  thick,  this  bed  would  contain  about 


LAKE  SUPERIOR  IRON.     OLD  RANGES  129 

8,000,000,000,000  tons,  an  astronomical  figure.  That  is  more  ore  than 
all  the  coal  in  the  world  could  smelt;  at  its  supposed  grade  of  30  per  cent, 
metallic  iron,  it  would  make  2,400,000,000,000  tons  of  pig  iron,  enough  to 
maintain  the  present  output  of  the  United  States  for  60,000  years. 

The  supposition  that  the  Mesabi  and  Gogebic  may  be  one  and  the 
same  bed  is  based  on  the  identity  of  the  rock  succession  which  persists 
down  to  almost  all  details.  In  each  case  a  basal  sandstone  (now  a 
quartzite)  is  overlain  by  a  solid  mass  of  iron  formation  400  to  800  or  even 
1200  feet  thick,  followed  by  a  huge  mass  of  shales  or  slates.  In  each  case 
in  the  middle  of  the  iron  formation  there  is  a  thin  but  persistent  slaty 
seam  or  horizon  which  has  an  important  influence  on  mining. 

At  any  rate  whether  the  Gogebic  and  Mesabi  are  identical  or  not  the 
volume  of  the  Huronian  iron  formation  is  enormous.  I  have  mentioned 
the  amount  in  trillions  of  tons  to  bring  home  the  fact  that  the  900,000,000 
tons  already  mined,  added  to  the  2,000,000,000  tons  more  in  sight, 
is  only  a  minute  fraction  of  the  mass.  The  mining  is  done  wholly  upon 
the  decayed  fringes  of  the  original  deposits,  mere  shreds  of  them  where 
the  process  of  leaching  and  oxidation  have  produced  natural  concentrates. 
Should  means  be  found  of  converting  the  unleached  formation  into  artifi- 
cial concentrates  the  iron  ore  supply  of  North  America  would  be  assured 
for  more  future  time  than  the  human  animal  has  any  reason  to  speculate 
about. 

This  remarkable  area  has  lately  been  producing  about  eighty  per  cent, 
the  iron  of  North  America  and  nearly,  or  quite,  half  of  that  of  the  World. 
Minnesota  yields  about  two  thirds;  Michigan  and  Wisconsin  the  remain- 
ing third.  Although  there  are  six  " Ranges"  in  all,  the  Mesabi  in  Minne- 
sota preponderates  heavily  over  all  the  others  combined.  Thus  in  1916, 
the  year  of  record  production  to  date,  the  output  was  as  follows : 


Minnesota 


Michigan 


Long  tons 

Mesabi 42,525,612 

Vermilion 1,947,200 

Cuyuna 1,716,218 

Marquette 5,396,007 

Menominee 6,364,363 

i  Gogebic 8,489,685 


Total 66,658,466 

The  total  production  to  the  end  of  1918  is  approximately  as  follows: 

Mesabi,  from  1892 490,000,000 

Vermilion,  from  1884 43,000,000 

Cuyuna,  from  1911 10,000,000 

Marquette,  from  1855 130,000,000 

Menominee,  from  1877 115,000,000 

Gogebic,  from  1885 110,000,000 

Grand  Total..  898,000,000 


130 


THE  COST  OF  MINING 


These  ores  are  high  grade,  averaging  about  50%  iron  in  thier  natural 
state  that  is  with  the  moisture,  and  about  56  per  cent.  dry. 

In  the  former  edition  of  this  volume  little  was  said  about  mining  on 
the  "Old  Ranges"  i.e.,  all  except  the  Mesabi  and  Cuyuna,  but  in  1911 
a  survey  published  by  the  State  Board  of  Tax  Commissioners  of  Michigan 
gave  a  great  deal  of  information  on  the  subject.  Since  this  is  the  only 
authoritative  data  to  be  had  on  a  very  large  group  of  mines,  I  am  adding 
a  summary  of  it. 

It  will  be  seen  that  the  figures  about  to  be  given  represent  the  mining 
on  all  the  Ranges  except  the  Mesabi  and  therefore  account  to  date  for 
more  than  400,000,000  tons.  Perhaps  all  these  mines  taken  together 
have  been  worked  out  to  an  average  depth  of  1000  ft.  Their  production 
is  about  400,000  tons  per  vertical  foot.  If  all  these  ore-bodies,  constitut- 
ing no  less  than  200  mines,  were  put  together  they  would  make  one  grand 
body  the  horizontal  cross  section  of  which  would  only  be  about  120  acres 
in  area.  Some  ore  bodies  are  worked  jointly  by  two  or  more  mines; 
but  not  commonly  enough  to  alter  radically  the  conclusion  to  be  drawn 
from  the  statement  just  made  i.e.,  that  the  ore-bodies  are  not  exceedingly 
large  and  are  scattered  over  a  very  large  territory.  There  are  indeed 
some  very  large  deposits  among  them,  or  aggregates  of  ore  bodies,  for 
when  large  they  are  seldom  simple.  Of  such  the  largest  is  the  series  of 
bodies  worked  by  the  Norrie,  Newport  and  Ashland  mines  on  the  Goge- 
bic.  These  have  been  followed  to  a  depth  of  about  2400  feet  and  have 
yielded  about  60,000,000  tons  in  35  years.  The  next  largest  individual 
mine  is  the  Chapin  on  the  Menominee  Range,  which  has  produced  in  40 
years  some  21,000,000  tons.  There  is  scarcely  an  individual  deposit  on 
the  Marquette  Range  that  has  yielded  10,000,000  tons  during  the  60 
years  life  of  that  district.  These  conditions  are  reflected  in  the  relation 
of  "ore  in  sight"  to  production. 


Ore  reported 
in  sight  1911 

Ore  shipped 
8  years 
1911-1918 
inclusive 

Per  year 

Gogebic  
Marquette  .  .  . 

17,354,000 
50,288,000 

45,660,000 
32  870  000 

5,700,000 
4  109,000 

Menominee  

20,579,000 

39,800,000 

4,975,000 

Total 

88  221  000 

118  330  000 

Average  output  per  year  

14  790  000 

From  this  table  it  will  appear  that  these  mines  do  not  differ  very  much 
from  fissure-vein  sulphide  mines  in  the  matter  of  blocking  out  ore.  They 
seem  to  keep  only  3  or  4  years  supply  developed.  The  Marquette  Range 
is  an  exception;  there  ore  indicated  by  drilling  was  reported,  chiefly  by 
the  Cleveland-Cliffs  Iron  Company.  Even  here  the  reserve  was  only  12 
years  life. 


LAKE  SUPERIOR  IRON.     OLD  RANGES 


131 


I  have  not  inquired  closely  into  the  discoveries  of  new  ore  in  these 
districts  since  1911,  but  judging  from  the  way  they  maintain  or  increase 
their  output  the  date  of  exhaustion  must  be  a  long  way  off.  One  or  two 
important  new  mines  and  several  important  ore  bodies  have  been  dis- 
covered on  the  Gogebic  and  there  is  no  doubt  that  this  range  will  greatly 
exceed  any  expectation  I  was  able  to  hold  for  it  in  1911.  Whether  the 
others  will  exceed  expectations  similarly  remains  to  be  seen,  but  I  regard 
it  as  probable. 


Construc- 

tion, de- 

District 

Tons 

General 

velopment 

Mining 

Total 

Total 

expense 

and  ex- 

per ton 

ploration 

No.  1.     Gogebic  Range  

15,711,053 

$1,558,705 

$4,083,864 

$21,207,105 

$26,849,675 

$1.72 

No.  2.     Iron  County  

3,999,457 

352,688 

3,574,038 

5,211,894 

9,138,622 

2.28 

No.  3.     Crystal  Falls  

6,777,255 

437,288 

1,789,786 

6,565,400 

8,792,475 

1.28 

No.  4.     Menomince  Range.  .  . 

10,052,564 

971,447 

1,915,320 

11,289,470 

14,176,237 

1.42 

No.  5.     Baraga  County  

744,603 

48,919 

159,844 

951,722 

1,160,486 

1.56 

No.  6.     Marquette  riard  Ores 

4,078,863 

582,605 

1,173,335 

6,801,080 

8,557,021 

2.10 

No.  7.     Marquette  Soft  Ores. 

11,354,811 

1,395,899 

2,140,866 

15,107,981 

18,644,746 

1.64 

No.  8.     Swanzy  

2,095,723 

112,674 

307,771 

33,312,786 

3,793,231 

1.81 

No.  9.     Scattered  Low  Grade  . 

1,293,658 

59,960 

279,101 

845,056 

1,184,119 

0.92 

Total  

56,107,987 

$5,580,185 

$15,423,925 

$71,292,494 

$92  296  612 

Cost  per  ton  

$0.10 

$0.275 

$1.27 

$1.645 

$1.65 

This  table  shows  the  total  output  and  costs  of  all  Michigan  iron  mines  for  five  years  1906-1910 
inclusive,  in  long  tons.  The  external  operating  conditions  are  about  the  same  throughout  the  field; 
rigorous  winters,  cool  summers  a  vigorous  population,  and  reasonably  cheap  living. 

I  believe  it  is  correct  to  say  that  a  considerable  portion  of  the  "General 
Expense"  and  "Construction"  in  this  table  is  represented  in  the  discussion 
of  the  U.S.  Steel  Corporation's  business1  as  general  expense  and  deprecia- 
tion; that  is,  as  overhead  or  capital  charges.  These  figures  are  un- 
doubtedly complete  in  the  aggregate,  but  it  is  not  possible  to  do  more  than 
generalize  roughly  on  the  details  because  the  different  companies  did 
not  report  their  expenditures  in  the  same  manner;  one  would  group  all 
construction  in  a  lump,  perhaps  even  include  it  all  under  the  general 
head  of  " mining,"  while  others  would  separate  it  in  detail;  but  still 
those  who  did  this  might  employ  different  groupings.  If  construction 
represents  in  general  the  depreciation  of  fixed  equipment,  and  if  the 
depreciation  is  6  per  cent,  a  year,  we  may  arrive  at  the  conclusion  that  the 
capital  thus  employed  in  the  Michigan  iron  mines  is  about  $2.50  per 
annual  ton.  Fifteen  cents  per  ton  seems  to  be  about  the  amount  of 
actual  construction.  Other  details  will  appear  in  the  tables  for  the 
separate  districts. 

The  total  number  of  men  employed  was  reported  at  16,024,  with  some 
apparently  not  very  important  omissions.  The  average  output  was 

1  See  following  chapter. 


132 


THE  COST  OF  MINING 


11,200,000  tons  so  that  the  output  per  man  was  700  tons  per  year.  The 
total  cost  per  man  per  year  was  $1150  at  the  mines;  the  actual  wages 
and  salaries  $730  per  man  per  year,  being  about  64  per  cent,  of  the  total 
cost,  and  averaging  $2.40  per  working  day. 

Under  the  conditions  of  1918  it  is  probable  that  these  factors  indicate 
average  costs  at  the  mines  of  $3  per  ton,  or  more,  and  total  costs  (about 
$1.70  freight  added)  at  the  lower  lake  ports  approaching  $5. 

DISTRICT  No.  1.  GOGEBIC  COUNTY,  MICHIGAN 
Number  of  mines  and  explorations  reported .  .  20 

Wages  and  salaries  paid $16,632,296.40 

Per  ton 

General  expenses  (not  including  taxes) $1,558,705 . 93  $0. 098 

Construction,  development  and  explorations. .         4,083,864.20  0.260 

Mining  expense 21,207,105. 10  1.355 

Total  cost  at  mine $26,849,675.23  $1.72 

Rail  freights  paid 6,002,288.37  0.40 

Lake  freights  paid 10,585,921 . 64  0. 71 

Commissions  paid 695,520. 57  0. 046 

Total  expense $44,133,405.81                        $2.876* 

f.o.b.  Cleveland. 

Total  tons  sold 14,183,842 

Total  tons  shipped 15,393,642 

Total  tons  mined 15,711,053 

Total  tonnage  reported  in  sight . . .  17,354,100 

Receipts  from  sale  of  ore $65,694,536 . 07 

Total  operating  profit  of  12  mines 21,944,683. 57 

Taxes 992,272.42 

Proportion  taxes  to  operating  profits  (per  cent.)  4.55 

Royalties 5,960,403.65 

Profit  to  companies  (12  mines) 15,212,854 . 39 

Total  profits  12  mines  including  royalties 20,957,419.53 

Total  loss  to  three  mines  (exploration  and  de- 
velopment properties  not  included 678,579 . 85 

This  district  is  about  the  best  and  most  profitable  among  the  "Old  Ranges."  Its 
ores  are  prevailingly  Bessemer  and  run  about  62%  metallic  iron,  dry,  and  from  51  to 
56  %  natural.  These  facts  are  reflected  in  the  profits  which,  including  royalties  aver- 
aged about  $1.33  per  ton,  or  30%  of  the  average  selling  price  at  Cleveland. 

DISTRICT  No.  2.     IRON  COUNTY,  MICHIGAN 
Number  of  mines  and  explorations  reporting.  29 

Wages  and  salaries  paid $  4,411,151.48 

General  expenses  (not  including  taxes) 352,688.21 

Construction,  development  and  explorations..         3,574,038.89 
Mining 5,211,894.90 


Per  ton 
$0.087 

0.895 
1.30 


Total  cost  at  mine $9,138,622.10 

*  The  average  cost  per  ton  includes  mines  worked  at  a  loss. 


$2.282 


LAKE  SUPERIOR  IRON.  OLD  RANGES  133 

Rail  freights  paid 1,279,487.98  $0.40 

Lake  freights  paid 1,609,055. 90  0. 54 

Commissions  paid 260,351.01  0.067 


Total  expense. 12,287,516.99                        $3.289* 

f.o.b.  Cleveland. 

Total  tons  sold 3,848,325 

Total  tons  shipped 3,820,308 

Total  tons  mined 3,999,457 

Total  tonnage  reported  in  sight      10,169,213 

Receipts  from  sale  of  ore $12,740,286. 82 

Total  operating  profit  of  9  mines 2.044,106. 72 

Taxes 103,907. 11 

Proportion  of  taxes  to  operating  profit   (per 

cent.) 5.5 

Royalties  paid 844,038.89 

Profits  to  companies  (7  mines) 1,395,354. 01 

Total  profits  9  mines  (including  royalties)  .  .  1,952,543.49 

Total  loss  to  companies  (10  mines) 1,912,320 .91 

This  district  produces  only  non-bessemer  ores  of  rather  low  grade,  seldom  running 
over  56%  dry  and  about  50%  natural.     The  profits  are  only  15%  of  the  selling  price. 

DISTRICT  No.  3. — CRYSTAL  FALLS 

Totals  Per  ton 

Number  of  mines  and  explorations  reporting 25 

Wages  and  salaries  paid $  4,756,223 . 68 


General  expenses  (taxes  not  included) 437,288 . 47  $0.  064 

Construction,  development  and  explorations 1,789,786.65  0.26 

Mining 6,565,400.84  0.956 


Total  cost  at  mine 8,792,475.96  $1.28 

Rail  freights  paid 2,374,293.64  0.40 

Lake  freights  paid 3,267,453. 98  0. 57 

Commissions  paid 548,504. 29  0. 09 


Total  expense $14,982,727.87  $2. 34* 

Total  tons  sold 6,050,662 

Total  tons  shipped 6,119,177 

Total  tons  mined 6,777,255 

Total  tonnage  reported  in  sight 1,233.900 

Receipts  from  sale  of  ore $20,861,190.27 

Total  operating  profit  (10  mines) 6,361,951 . 98 

Taxes 131,493.43 

Proportion  of  taxes  to  operating  profits  (per  cent.) .  2.6 

Royalties  paid 1,611,190. 15 

Profits  to  companies  (8  mines) 4,846,463 . 22 

Total  profits  (10  mines)  including  royalties 6,238,753. 13 

Total  loss  to  companies  (6  mines)  not  including  ex- 
plorations   710,684.40 

While  this  district  produced  only  low-grade  ores,  such  as  those  of  district  No.  2, 
the  mines  were  remarkably  profitable  owing  to  some  very  low  costs.  The  profits 
averaged  over  26  per  cent,  on  the  selling  price. 

*  Includes  unprofitable  mines. 


134 


THE  COST  OF  MINING 


DISTRICT  No.  4. — OLD  MENOMINEE  RANGE 

Totals  Per  ton 

Number  of  mines  and  explorations  reporting 12 

Wages  and  salaries  paid $  9,322,449.20 

General  expense  (not  including  taxes) , .  971,447 . 21  $0. 097 

Construction,  development  and  explorations 1,915,320.33  0. 192 

Mining 11,289,470.33  1.128 

Total  cost  at  mine 14,176,237.87  $1.417 

Rail  freights  paid 3,483,420.04  0.40 

Lake  freights  paid 5,369,237. 62  0. 60 

Commissions  paid 66,661 .27  0 . 07 

Total  expense 23,096,556.80                  $2.487 

Tons  sold 9,391,360  f.o.b. 

Tons  shipped 9,335,812  Cleveland 

Tons  mined 10,052,564 

Total  tonnage  reported  in  sight 9,177,348 

Receipts  from  sale  of  ore $34,103,131.46 

Total  operating  profit  of  ten  mines 11,040,230. 75 

Taxes 795,696.22 

Proportion  of  taxes  to  operating  profit  (per  cent.) .  7. 24 

Royalties  paid 2,395,619.41 

Profit  to  companies  (9  mines) 7,885,624. 86 

Total  profit  (9  mines)  (including  royalties) 10,249,066 . 96 

Total  loss  to  companies,  two 69,365 . 83 

This  district  produces  generally  fairly  hard  ores,  partly  Bessemer  and  partly  non- 
Bessemer.  The  costs  average  low,  both  for  local  expenses  and  for  freight,  and  ore 
was  delivered  at  Cleveland  for  only  $2.48  per  ton  for  all  operating  and  construction 
charges.  The  average  profit,  including  royalties,  was  $1.10  per  ton,  30  per  cent, 
of  the  selling  price. 


DISTRICT  No.  5. — BARAGA  COUNTY,  MICHIGAN 


Totals 


Number  of  mines  and  explorations  reporting 
Wages  and  salaries  paid 


$    565,969.48 


General  expenses  (not  including  taxes) $      48,919. 32 

Construction,  development  and  explorations 159,844 . 44 

Mining 951,722.56 


Total  cost  at  mine $1,160,486.32 


Rail  freights  paid  . 
Lake  freights  paid 
Commissions  paid. 


228,479.12 

398,492.21 

40,147.35 


Total  expense $1,827,605. 00 

Tons  sold 657,370 

Tons  shipped 657,370 

Tons  mined. 744,603 

Tons  reported  in  sight 1,864,185 


Per  ton 


$0.065 
0.214 
1.28 

$1.56 

0.35 
0.61 
0.06 

$2.58 


LAKE  SUPERIOR  IRON.     OLD  RANGES  135 

Receipts  from,  sale  of  ore $1,807  495  98 

Total  operating  profits,  three  mines 45,377. 44 

Taxes 7,331,05 

Proportion  of  taxes  to  operating  profit  (per  cent.) 16. 2 

Royalties  paid 136,601 . 62 

Profits  to  companies  (3  mines) None 

Total  profits  three  mines  (including  royalties) 36,046.39 

Total  loss  to  companies,  three  mines 98,555 . 23 

This  district  is  in  the  upper  Huronian  at  the  west  end  of  the  Marquette  Range. 
It  is  of  slight  importance. 

DISTRICT  No.  6. — MARQUETTE  COUNTY,  MICHIGAN 

Totals  Per  ton 

Number  of  mines  and  explorations  reporting 11 

Wages  and  salaries  paid $  5,296,  704 . 30 


General  expenses  (taxes  not  included) 582,605 . 38         $0. 14 

Construction,  development  and  explorations 1,173,335.39  0.29 

Mining 6,801,080.83  1.67 


Total  cost  at  mine $  8,557,021 . 60  $2. 10 

Rail  freight  paid 1,230,335.82  0.40 

Lake  freight  paid 2,359,387 .30  0 .  60 

Commissions  paid 59,900 .93  0 .  02 


Total  expense $12,206,645.65         $3. 12 

Tons  sold 3,873,785 

Tons  shipped 3,888,557 

Tons  mined 4,078,863 

Tons  reported  in  sight 11,134,355 

Receipts  from  sale  of  ore $17,015,407. 56 

Total  operating  profit,  6  mines 5,246,934. 10 

Taxes 496,505.01 

Proportion  of  taxes  to  operating  profit  (per  cent.) .......  9. 45 

Royalties  paid. .' 262,329. 14 

Profit  to  companies,  6  mines 4,723,752.  76 

Total  profits,  6  mines  (including  royalties) 4,866,081 .  90 

Total  loss  to  companies,  2  mines 572,825. 00 

This  district  includes  many  of  the  oldest  and  most  famous  mines  in  the  Lake 
Superior  District — the  "hard  ore"  mines  of  Marquette,  such  as  the  Republic,  Cham- 
pion, Lake  Superior  and  Cleveland.  These  ores  occur  along  the  unconformable  con- 
tact of  the  Middle  Huronian  iron  formation  and  the  basal  quartzite  of  the  Upper 
Huronian.  Very  probably  this  ore  represents  oxidation  and  concentration  on  an 
ancient  land  surface — at  least  to  a  considerable  extent. 

DISTRICT  No.  7. — MARQUETTE  COUNTY,  MICHIGAN 

Totals  Per  toh 

Number  of  mines  and  explorations  reporting 20 

Wages  and  salaries  paid $12,011,515.90 


General  expenses  (not  including  taxes) 1,395,899 .35         $0 . 12 

Construction,  development  and  explorations 2,140,866.05  0. 19 

Mining 15,107,981.23  1.33 


Total  cost  at  mine..  $18,644,746.63         $1.64 


136  THE  COST  OF  MINING 

Rail  freight  paid 3,064,947.71  0.32 

Lake  freight  paid 5,424,983.28  0.65 

Commissions  paid 134,029.88  0.01 


Total  expense . $27,268,707.50         $2.62 

Tons  sold 10,744,791 

Tons  shipped 10,830,611 

Tons  mined 11,354,811 

Tons  reported  in  sight 35,961,538 

Receipts  from  sale  of  ore $39,605,117.47 

Total  operating  profits,  15  mines 12,467,025. 65 

Taxes 865,028.59 

Proportion  taxes  to  operating  profit,  per  cent 6. 98 

Royalties  paid 1,859,944. 05 

Profit  to  companies,  13  mines 9,867,181 .86 

Total  profits,  14  mines  (including  royalties) 11,654,992.00 

Total  loss  to  companies,  4  mines 255,584 . 53 

This  district  covers  most  of  the  soft  ores  of  Marquette;  bodies  formed  by  leaching 
from  the  surface  along  channels  of  free  circulation  of  water.  They  are  concentrations 
in  the  body  of  the  Middle  Huronian  iron  formation,  generally  upon  some  impervious 
rock  layer  bent  into  a  trough-like  form. 

DISTRICT.  No.  8. 

Totals  Per  ton 

Number  of  mines  and  explorations  reporting , 13 

Wages  and  salaries  paid $2,158,212.35 


General  expense  (not  including  taxes) 172,674. 60         $0. 082 

Construction,  development  and  explorations 307,771  .22  0. 148 

Mining 3,312,786.07  1.580 


Total  cost  at  mine $3,793,231.89  $1.81 

Rail  freights  paid 311,706. 73  0. 32 

Lake  freights  paid 418,475.85  0.65 

Commissions  paid 


Total  expense $4,523,414.47         $2.78 

Tons  sold 1,669,737 

Tons  shipped 1,670,263 

Tons  mined 2,095,723 

Total  tonnage  expected 6,746,158 

Receipts  from  sale  of  ore $5,682,757.47 

Total  operating  profit,  6  mines 1,267,967. 36 

Taxes 99,687. 11 

Proportion  of  taxes  to  operating  profit  (per  cent.) 7.9 

Royalties  paid 540,348. 62 

Profit  to  companies,  1  mine 1,047,803 .  59 

Total  profit,2  mines  (including  royalties) 1,219,975. 79 

Total  loss  to  companies,  3  mines 528,496. 32 

This  is  a  small  outlying  basin  of  the  Marquette  Range,  known  as  the  Swamzy 
district.     Presumably  its  geology  is  some  variation  of  that  of  district  No.  7. 


LAKE  SUPERIOR  IRON.     OLD  RANGES  137 

DISTRICT  No.  9. — VARIOUS  SCATTERED  LOW-GRADE  MINES. 

Totals  Per  ton 

JS1  umber  of  mines  and  explorations  reporting 11 

Wages  and  salaries  paid $  620,145. 06        $0. 44 


General  expenses  (taxes  not  included) 59,960. 53  $0. 045 

Construction,  development  and  explorations 279,101 .91           0. 22 

Mining 279,101.91           0.22 

Total  cost  at  mine $1,184,119.36  $0.925 

Rail  freights  paid $  454,062.59  $0.40 

Lake  freights  paid 502,930. 70           0. 60 

Commissions  paid 72,834 .61           0.10 


Total  expense $2,213,947.26        $2.025 

Tons  sold 1171,024 

Tons  shipped 1179719 

Tons  mined 1,293,658 

Tons  reported  in  sight 1,323,074 

Receipts  fom  sale  of  ore $2,261,830. 18 

Total  operating  profit,  4  mines 386,208. 35 

Taxes 21,327.20 

Proportion  taxes  to  operating  profit  (per  cent 5.45 

Royalties  paid 154,427 . 35 

Profit  to  companies,  4  mines 278,364. 85 

Total  profit  (including  royalties) 374,323 . 47 

Total  loss  to  companies,  5  mines 406,235 . 48 

These  mines  are  not  a  district,  but  partial  concentrations  in  various  places. 

If  this  set  of  figures  represents  the  average  proportion  of  things  in 
the  iron  mining  business  of  the  Old  Ranges  we  find  that  the  average 
profit,  including  royalty,  is  about  12  per  cent,  of  the  value  of  the  contained 
pig  iron  at  Pittsburgh.  A  large  proportion  of  the  mines  are  leaseholds, 
paying  royalties  to  the  owners  of  the  fee.  Where  royalties  are  paid  on 
average  ore  they  will  be  perhaps  30  cents  a  ton. 

Vaue  of  ore  at  Cleveland $3.80 

Cost  of  mining,  construction,  exploration $1 . 65 

Transportation 1 . 07 

Taxes , 07 

All  costs $2.  79 

Gross  operating  profit 1.01 

Royalty 0. 30 

Profit  to  leaseholder $0.71 

Average  content  of  ore  in  iron  (natural)  54  per  cent.  Value  of  this 
pig  iron  in  Pittsburgh  about  $8.64.  Value  of  ore  at  Cleveland  compared 


138 


THE  COST  OF  MINING 


to  the  value  of  its  metallic  contents  made  into  pig  iron  at  Pittsburgh, 
about  44  per  cent. 

Profit  on  capital  invested  in  plant  about  28  per  cent.  The  entire 
capital  invested  must  be  very  much  greater  than  that  represented  by  the 
plant.  It  would  have  to  include  either  the  cost  of  finding  a  mine  by 
exploration,  or  else  a  purchase  price  for  a  developed  mine,  or  both. 

It  must  of  course  be  reiterated  that  none  of  these  figures  represent 
the  costs  ruling  in  1919  which  are  no  doubt  40  to  50  per  cent,  higher  than 
those  given.  Under  present  conditions  the  price  of  these  ores  should  be 
about  $6.00  a  ton  to  maintain  the  business  in  approximate  equilibrium. 

TABLE  I. — LAKE  SUPERIOR  IRON-ORE  SHIPMENTS 
(In  Long  Tons) 


1916 

1917 

1918 

Escanaba  

7,457,444 

7,156,854 

6,774,969 

Marquette  

3,858,092 

3,207,145 

3,457,054 

Ashland  . 

8,057,814 

7,597,841 

7,565,608 

Two  Harbors  
Superior.  .  . 

10,735,853 
12,787,046 

9,990,901 
13,978,741 

8,723,472 
14,068,341 

Duluth  

21,837,949 

20,567,419 

20,567,288 

Totals  by  lake  

64,734,198 

62,498,901 

61,156,732 

Totals  all  rail  (est.) 

1  924  268 

1  938  102 

2  000,000 

Total  shipments  

66,658,466 

64,437,003 

63,156,732 

TABLE  II. — MONTHLY  PRODUCTION  OF  COKE  AND  ANTHRACITE  PIG  IRON  IN  THE 

UNITED  STATES,  BEGINNING  JAN.  1,  1914 

(In  Long  Tons) 


1914 

1915 

1916 

1917 

1918 

January  
February  
March  
April.  .  .  . 

1,885,054 
1,888,670 
2,347,867 
2,269,655 

1,601,421 
1,674,771 
2,063,834 
2  116494 

3,185,121 
3,087,212 
3,337,691 
3  227  768 

3,150,839 
2,645,247 
3,251,352 
3  334  960 

2,411,768 
2,319,299 
3,213,091 
3,288,211 

May  
June. 

2,092,686 
1,917  783 

2,263,470 
2  380  827 

3,361,073 
3  211  588 

3,417,340 
3  270  055 

3,446,412 
3,323,791 

July 

1  957  645 

2  563  420 

3  224  513 

3  342  438 

3  420  988 

August  
September  
October  

1,995,261 

1,882,577 
1,778  186 

2,779,647 
2,852,261 
3  125  491 

3,203,713 
3,202,366 
3  508  849 

3,247,947 
3,133,954 
4  303  038 

3,389,585 
3,418,270 
3,486,941 

November  
December  

1,518,316 
1,515,752 

3,037,308 
3,203,322 

3,311,811 
3,178,651 

3,205,794 

2,882,918 

3,354,074 
3,433,617 

Totals  (a). 

23,049  752 

29  662  566 

39  039  356 

38  185  981 

38,506,047 

(a)  Totals  do  not  include  charcoal  pig  iron.     Figures  secured  from  Iron  Age. 


LAKE  SUPERIOR  IRON.     OLD  RANGES 


139 


TABLE  III. — PIG-!RON  PRODUCTION  (a)  FOR  15  YEARS 

(In  Long  Tons) 

16,497,003         1909 25,795,471  1914 

1910 27,303,567  1915 

1911 23,649,547  1916 

1912 29,726,937  1917 

1913 30,966,152  1918(6).. 


1904 

1905 22,992,380 

1906 25,307,391 

1907 25,781,381 

1908 15,936,918 

(a)  American  Iron  and  Steel  Institute. 

(6)  Estimated. 


23,332,244 
29,916,213 
39,434,797 
38,621,216 
38,820,000 


TABLE  IV. — PIG-IRON  PRODUCTION  BY  GRADES 


1917 


1918(a) 


Long  tons 

Per  cent 

Long  ton 

Per   cent 

Basic 

17,671,662 

45  8 

18,361,860 

47   3 

Bessemer  

13,714,732 

35  5 

12,810,600 

33  0 

Foundry 

5,328,258 

13  8 

5,357,160 

13  8 

Malleable  

1,015,579 

2.6 

1,281,060 

3.3 

Forge  .... 

345,707 

0  9 

427,020 

1  1 

Spiegeleisen 

171,675 

0  5 

194,100 

0  5 

Ferromanganese  

281,425 

0  7 

310,560 

0  8 

All  other  

92,168 

0.2 

77,640 

0.2 

Totals 

38,621,216 

100  0 

38,820,000 

100  0 

(a)  Estimated. 


CHAPTER  X 

COST  OF  MINING  LAKE  SUPERIOR  IRON 
MESABI  RANGE  AND  U.  S.  STEEL* 

IMPORTANCE  OF  THE  DISTRICT — GENERAL  STATEMENT  OF  THE  COST  PROBLEM — THK 
UNITED  STATES  STEEL  CORPORATION — CAPITAL  EMPLOYED  IN  MINING,  TRANS 

PORTATION,  AND  BLAST  FURNACES WORKING  CAPITAL TREATMENT  OF  CAPITAL 

CHARGES IRON  MINES  AND  ROYALTIES COST  OF  MINING OLD  RANGES  AND 

THE  MESABI  RANGE — COST  OF  OPEN-PIT  OPERATIONS — ENGINEERING  AND  MANAGE- 
MENT— TAXES — ECONOMY  OF  CONSOLIDATION — ESTIMATE  OF  AVERAGE  MINING 
COST — TRANSPORTATION — ESTIMATES  OF  SELLING  COST  OF  PIG  IRON  AT  PITTS- 
BURGH— STATISTICAL  RECORD  OF  UNITED  STATES  STEEL  CORPORATION — ITS 

CAPITAL   CHARGES   AND   INCREASED   CAPACITY ITS   PROFITS ITS   PLANTS   AND 

PROPERTY REVIEW  OF  OPERATIONS  OF  STEEL  CORPORATION  1909-1918. 

When  people  speak  of  the  output  of  metal  mines  in  general  they  mean 
the  gross  selling  value  of  the  refined  metals  of  New  York.  Now  the  value 
of  Lake  Superior  iron  ores  is  never  given  in  mass.  You  hear  of  the  value 
of  bessemer,  or  non-bessemer,  old  range  or  Mesabi  ores  at  the  mines  or  at 
Cleveland,  but  you  do  not  hear  of  average  values  nor  of  gross  values  in 
pig  iron. 

But  if  we  make  a  correct  comparison  of  the  importance  of  various 
districts  on  the  basis  of  the  value  of  their  products  in  New  York  in  1918, 
we  shall  see  that  Lake  Superior  pig  iron  transcends  them  all. 

Lake  Superior  copper $      53,000,000 

Southeast  Missouri  lead 25,000,000 

Southwest  Missouri  zinc 32,000,000 

Butte  copper 80,000,000 

Southwestern  copper 210,000,000 

Transvaal  gold 179,000,000 

Lake  Superior  iron 1,150,000,000 

Mesabi  Range  alone 760,000,000 

The  business  is  profitable,  one  of  the  most  profitable  in  the  world, 
on  account  of  its  volume,  but  it  is  not  easy  to  give  precise  figures  concern- 
ing it.  Much  has  been  written  on  the  various  problems  involved,  such 
as  the  caving  system  of  mining,  the  systems  of  accounting,  mining 
open  pits,  blast-furnace  practice,  etc.,  but  each  of  these  is  only  a  link  in 
the  chain.  I  have  never  found  any  comprehensive  discussion  of  the 
subject  as  a  whole.  I  have,  therefore,  endeavored  to  work  out  on  an 

*The  first  part  of  this  chapter  was  written  in  1909,  the  latter  part  in  1919.  Some 
of  the  comparative  figures  may  be  somewhat  out  of  date  to-day,  but  I  hope  not  to  a 
great  enough  extent  to  convey  any  serious  false  impression. 

140 


COST  OF  MINING  LAKE  SUPERIOR  IRON  141 

original  basis  a  statement  of  the  cost  of  operating  this  vast  business. 
It  may  be  interesting  to  explain  the  method. 

General  Statement. — The  first  thing  to  decide  is  what  to  include  in  the 
cost.  At  present,  it  is  not  a  matter  of  any  particular  interest  to  have 
details  of  the  mere  cost  of  extracting  ore  from  some  particular  iron  mine 
and  dumping  it  on  the  surface,  although  before  the  absorption  of  most 
of  the  mines  by  the  various  steel  and  furnace  corporations  the  local  mining 
costs  were  indeed  a  subject  of  interest.  There  were  then  many  companies 
which  only  mined  the  ore  and  sold  it  at  the  pit  mouth. 

At  the  present  time  by  far  the  greater  part  of  the  ore  is  mined  by  con- 
cerns which  use  it  to  make  pig  iron  and,  in  many  cases,  finished  manu- 
factured steel  or  iron  products.  To  describe  this  industry  in  parallel 
terms  to  those  used  in  the  case  of  other  metals  it  seems  to  me  that  we 
should  find  the  cost  of  pig  iron  delivered  at  New  York.  It  is  quite  true 
that  New  York  is  not  the  greatest  market  for  pig  iron,  but  since  I  have 
discussed  other  metals  on  the  theory  of  their  delivery  there  it  is  reasonable 
to  follow  the  same  plan  with  iron. 

The  reason  for  stopping  with  the  production  of  pig  iron  is  simply  the 
analogy  of  other  metals.  Pig  iron  is  the  basic  commodity  of  iron  manu- 
facture. It  bears  the  same  relation  to  the  making  of  steel  rails  or  pocket 
knives  as  blister  copper  slabs  bear  to  the  making  of  copper  wire  or  brass 
door  knobs,  or  as  pig  lead  bears  to  lead  pipe  or  buck-shot.  As  I  shall 
try  to  show  what  it  costs  to  produce  from  various  districts  copper 
lead,  and  zinc  ready  for  manufactures,  so  I  shall  try  to  show  the  cost  of 
bringing  Lake  Superior  iron  to  the  same  stage.1 

Complexities  of  the  Problem. — When  we  give  this  problem  some 
attention  we  soon  find  it  rather  complex.  The  ore  comes  from  scores  of 
different  mines,  each  producing  its  own  particular  grade  at  its  own 
particular  cost.  But  the  cost  of  getting  ore  out  of  the  mine  is  con- 
siderably less  than  that  of  transporting  the  ore  from  the  mines  to  the 
furnaces,  although  the  cost  of  transportation  varies  considerably  according 
to  the  situation  of  the  mine.  We  find  that  in  some  cases  large  royalties 
are  paid  to  fee  owners  and  in  other  cases  the  mining  company  owns  the 
ground.  These  various  factors  are  bewildering.  Furthermore  none 
of  the  companies  gives  its  costs. 

The  United  States  Steel  Corporation,   however,  issues  very   good 

1  In  this  chapter  I  have  assumed  in  regard  to  the  United  States  Steel  Cor- 
poration that  the  profits  on  ore  hauled  by  others  will  be  counterbalanced  by  profits 
earned  by  the  coporation  on  ore  hauled  for  others,  so  that  the  final  result  with  regard 
to  this  transportation  will  be  the  same  as  if  all  the  ore  mined  by  this  company  were 
transported  by  the  company.  I  have  also  assumed  that  the  making  of  pig  iron  at 
Pittsburg  is  representative  in  cost,  and  that  pig  iron  can  be  made  at  Pittsburg  and  sold 
at  New  York  for  as  low  a  price  as  pig  iron  made  at  other  points  and  shipped  to  New 
York.  All  tons  are  of  2240  pounds. 


142  THE  COST  OF  MINING 

reports.  These  and  various  isolated  data  published  by  the  U.  S.  Geo- 
logical Survey,  and  such  information  as  I  could  get  from  personal  observa- 
tion, are  the  sources  from  which  my  conclusions  are  derived.  The  Steel 
Corporation  is  fully  as  much  a  manufacturing  as  a  mining  concern  and 
even  buys  some  of  its  pig  iron  from  others.  It  does  not  stop  with  pig 
iron.  It  makes  steel  rails,  sheets,  wire,  rods,  and  even  spelter  and  cement. 
It  is  the  greatest  of  all  industrial  enterprises,  employing  in  good  times 
more  than  200,000  men.  Naturally  the  reports  of  such  a  corporation 
must  be  condensed.  As  a  matter  of  fact  no  operating  data  of  any  kind 
are  given.  The  omission  is  in  this  case  quite  proper.  The  production, 
the  earnings,  the  capital  expenditures,  the  property  holdings,  are  all 
given.  This  information  seems  at  first  insufficient  for  any  definite 
statement  of  costs,  but  it  is  all  that  can  be  had.  On  two  recent  trips 
to  the  Mesabi  range,  I  saw  a  good  deal  of  the  mines,  but  I  enjoyed  no 
confidences.  My  inquiries  were  such  as  any  one  could  easily  make. 
I  make  this  explanation  in  order  that  no  one  may  be  under  a  misappre- 
hension. The  basis  for  the  statements  I  am  about  to  make  is  what  I 
believe  to  be  common  sense. 

Activities  of  the  United  States  Steel  Corporation. — The  operations 
of  the  Steel  Corporation  are  undoubtedly  representative  of  the  Lake 
Superior  iron  business — far  more  so  than  those  of  any  other  concern. 
It  mines  and  ships  55  per  cent,  of  the  whole  product.  It  owns  two  of  the 
three  ore  railroads  in  Minnesota  and  the  shipments  over  its  roads  are 
52  per  cent,  of  the  whole  Lake  Superior  output.  Just  what  proportion 
of  the  ore  is  transported  on  the  lakes  by  the  company's  boats  I  do  not 
know.  When  we  come  to  pig  iron  we  find  that  the  company  produces 
an  amount  equivalent  to  55  per  cent,  of  the  probable  content  of  Lake 
ores.  It  seems  to  have  about  75  per  cent,  of  the  known  ore  reserves 
of  the  region.  We  may  conclude,  therefore,  that  this  company  performs 
about  55  per  cent,  of  the  business  all  along  the  line,  and  that  its  costs 
would  be  approximately  the  same  if  it  did  all  the  business. 

One  might  argue  that  the  costs  of  the  Steel  Corporation  are  radically 
different  in  some  respects  from  those  of  the  independents.  For  instance, 
an  independent  may  have  to  pay  80  cents  a  ton  for  freight  that  costs  the 
Steel  Corporation  only  40  cents.  It  is  for  this  very  reason  that  the  Steel 
Corporation  is  most  representative.  Its  business  is  complete;  that  of  the 
others,  fragmentary.  Just  as  the  independents  expect  a  profit  on  the  ore 
that  they  own,  so  they  must  expect  to  pay  a  profit  on  the  transportation 
that  they  do  not  own.  It  would  be  next  to  impossible  to  work  out  the  real 
cost  of  pig  iron  if  we  tried  to  discover  and  weave  together  the  obscure 
and  disjointed  costs  and  profits  of  a  chain  of  discordant  operators. 

Capital  Employed  at  Iron  Mines. — Fot  the  purpose  of  this  article 
the  capital  employed  is  one  of  the  most  vital  elements  to  consider.  Re- 
membering that  we  are  to  obtain  our  costs  on  pig  iron  and  not  on  finished 


COST  OF  MINING  LAKE  SUPERIOR  IRON  143 

products,  we  must  segregate  the  capital  used  in  manufacturing  from  that 
used  in  mining  and  smelting.  This  can  be  done  only  approximately. 
Probably  no  one  could  make  the  division  with  absolute  certainty,  for 
it  is  necessary  to  remember  that  transportation,  fuel,  and  power  facilities 
owned  by  the  company  are  used  for  the  joint  purpose  of  manufacturing 
steel  products  and  of  producing  pig  iron.  I  am,  therefore,  compelled 
to  make  a  division  on  my  own  judgment,  and  in  order  to  enable  the 
reader  to  estimate  the  legitimacy  of  this  judgment,  it  is  necessary  to  show 
the  method  of  arriving  at  it. 

The  corporation  owns  in  the  Lake  Superior  region  72  iron  mines  of 
which  10  are  on  the  Marquette  range,  10  on  the  Menominee,  6  on  the 
Gogebic,  6  on  the  Vermilion,  and  40  on  the  Mesabi  range.  Neglecting 
the  purchase  price  of  the  properties,  and  considering  only  the  actual 
money  invested  in  the  plants  for  the  machinery,  developments,  etc., 
I  make  a  rough  guess  that  the  total  capital  employed  would  be  somewhat 
as  follows : 

Old  ranges,  each  $2,500,000 $10,000,000 

Mesabi  range 25,000,000 

Invested  in  extensive  exploration  and  developments  in  the  whole  Lake 

Superior  region 15,000,000 


Total  investment $50,000,000 

Capital  Employed  in  Transportation. — The  Duluth  &  Iron  Range 
railroad  and  the  Duluth,  Missabe  &  Northern  railroad  with  a  total  of 
363  miles  of  main  line  would  be  indispensable  to  the  conduct  of  this  busi- 
ness, even  if  it  did  not  extend  beyond  the  production  of  pig  iron.  We  may 
calculate  the  value  of  this  property  at  $50,000  to  the  mile,  or  in  round 
numbers  $18,000,000.  The  Elgin,  Joilet  &  Eastern  railroad  and  various 
small  lines  near  the  manufacturing  plants,  with  a  total  length  of  about 
295  miles,  may  be  estimated  to  belong  half  to  the  production  of  pig  iron 
and  half  to  manufacturing.  I  would  charge,  therefore,  $7,000,000  in 
round  numbers  for  these  lines.  The  Bessemer  &  Lake  Erie  railroad, 
with  205  miles  of  lines,  I  would  charge  entirely  to  the  production  of  pig 
iron,  and  capitalize  it  at  $10,000,000.  This  figures  up  a  total  of 
$35,000,000  for  railroad  tracks.  In  addition  to  this  we  have  the  railroad 
equipment  which  I  estimate  at  $52,500,000,  out  of  which  $40,000,000 
would  be  necessary  for  the  production  of  pig  iron  alone.  We  have  then  a 
total  for  railroads  and  their  equipment  of  $75,000,000. 

The  marine  equipment  consists  of  76  steamers  and  29  barges.  Many 
of  these  steamers  are  the  largest  and  best  upon  the  lakes,  and  some  of 
them  undoubtedly  cost  $700,000  or  $800,000  each.  I  should  say  that  the 
total  equipment  must  be  worth  $40,000,000. 

Capital  Employed  in  Coal  and  Coke  Properties. — We  have  in  the 
Connellsville  and  neighboring  regions  62,253  acres  of  coal  lands  and  20,471 


144  THE  COST  OF  MINING 

coke  ovens.  I  believe  it  would  be  conservative  to  estimate  the  capital 
employed  there  at  $30,000,000.  In  the  Pocahontas  district  there  is  a 
lease  on  65,947  acres  on  which  are  2151  coke  ovens.  This  property 
must  have  cost  somewhere  in  the  neighborhood  of  $10,000,000  for  its 
development. 

There  are  in  addition  31,928  acres  of  steam-coal  ground  in  Penn- 
sylvania, West  Virginia,  and  Ohio.  I  would  estimate  the  valuation  of 
the  plants  employed  on  these  properties  to  be  at  least  $5,000,000.  We 
have  then  a  total  of  $45,000,000  for  coal  and  coke  plants.  Of  this  I 
should  say  $35,000,000  would  be  necessary  for  the  conduct  of  the  pig-iron 
business  of  the  corporation. 

Capital  in  Blast  Furnaces. — The  corporation  owns,  exclusive  of  its 
properties  in  the  South,  100  blast  furnaces,  many  of  them  the  largest 
and  best  in  the  world.  This  property  may  be  estimated  at  $110,000,000. 

For  the  handling  and  shipping  of  iron  ore,  coke,  and  coal,  the  corpora- 
tion owns  a  large  number  of  extensive  docks,  the  total  value  of  which 
I  would  guess  at  $20,000,000. 

Capital  in  Inventory  and  Surplus. — At  the  end  of  1908,  the  inven- 
tory of  the  Steel  Company  was  given  at  $143,000,000,  of  which  nearly 
$66,000,000  was  in  ore.  It  seems  to  be  a  fair  deduction  from  this,  if  its 
business  were  only  making  pig  iron  one-half  the  grand  total  would  be 
necessary — say  $70,000,000.  At  the  same  time  the  surplus  was  given  at 
$133,000,000,  of  which,  however,  $78,000,000  had  been  invested  on 
plant  account,  leaving  a  cash  balance  of  something  over  $50,000,000. 
We  may  assume  that,  inasmuch  as  the  selling  price  of  pig  iron  is  about 
one-half  of  that  of  the  finished  products — one-half  of  this  cash  surplus 
would  be  required  in  the  business  of  making  pig  iron — say  $25,000,000, 
making  a  total  working  capital  of  $95,000,000. 

Summary  of  Capital  Used. — We  may  summarize  the  capital  as  follows : 

Iron  mine  plants  and  development $  50,000,000 

Plants  for  transportation  of  iron  ore 115,000,000 

Coal,  coke,  and  quarry  plants 35,000,000 

Docks  and  dock  equipment 20,000,000 

Blast  furnaces 110,000,000 


Total  fixed  capital $330,000,000 

Working  capital  in  inventory  and  surplus 95,000,000 


Total  capital $425,000,000 

It  is  to  be  noted  that  this  estimate  does  not  include  the  purchase 
price  of  lands  or  good-will,  but  only  such  capital  as  would  be  required  is 
the  opportunity  to  conduct  this  business  were  a  free  gift.  Capital  so 
employed  is  worth  in  round  numbers  5  per  cent,  interest  plus  a  sinking 
und,  calculated  to  retire  the  principal  in  about  forty  years.  Such  a 


COST  OF  MINING  LAKE  SUPERIOR  IRON  145 

fund  is  equal  to  about  1  per  cent,  additional.  We  must  calculate  the  use 
of  this  capital  then  at  6  per  cent.,  and  this  is  not  profit.  It  is  merely  the 
actual  value  of  the  money  employed — such  a  return  as  can  be  secured  by 
an  investor  without  burdening  himself  with  the  management  of  an 
enterprise.  In  the  case  of  the  Steel  Corporation  by  far  the  greater 
portion  of  this  capital  is  actually  represented  by  5  per  cent,  bonds  to  be 
retired  by  a  sinking  fund  substantially  on  the  terms  indicated  above. 
We  must  therefore  include  as  an  operating  cost  of  this  business  an  annual 
installment  of  6  per  cent,  on  $330,000,000  equal  to  $19,800,000.  On 
an  output  of  10,000,000  tons  of  pig  iron  a  year  this  is  $1.98  a  ton. 

In  addition  to  this  we  must  make  a  charge  for  depreciation  which  is 
usually  represented  by  new  construction.  It  is  generally  believed  that 
depreciation  on  the  kind  of  property  in  question  will  amount  to  some  6 
per  cent,  per  annum.  But  in  this  case  the  entire  plant  is  not  in  use. 
The  above  investment  provides  capacity  for  nearly  15,000,000  tons  of 
pig  iron  a  year,  but  as  we  are  calculating  on  a  product  of  only  10,000,000 
or  two-thirds  capacity  it  seems  fair  to  charge  depreciation  only  on  two- 
thirds  of  the  capital  invested  or  $220,000,000.  Six  per  cent,  on  this 
amount  will  make  an  annual  installment  of  $13,200,000. 

The  working  capital  should  be  charged  with  an  average  rate  of  in- 
terest— say  5  per  cent.  This  on  the  $95,000,000  calculated  to  be  the 
amount  makes  an  annual  installment  of  $4,750,000. 

The  cost,  then,  of  making  pig  iron  should  be  charged  with  the  following 
sums  for  amortization  of  fixed  capital : 

For  amortization  of  fixed  capital $19,800,000 

For  depreciation 13,200,000 

For  interest  on  working  capital 4,750,000 


Total  capital  cost  per  annum $37,750,000 

Equal  to  $3.77  per  ton  on  the  assumed  output.1 

1  These  figures  are  different  from  those  calculated  in  an  article  on  this  subject 
of  which  the  present  chapter  is  substantially  a  reprint.  In  that  article  the  total 
capital  was  estimated  at  $475,000,000,  on  which  an  amortization  charge  of  6  per  cent, 
or  $28,400,000  was  made.  Further  investigation  has  revealed  some  inaccuracies  in 
this  calculation,  principally  in  the  items  of  working  capital  and  in  the  value  of  blast- 
furnace property. 

Furthermore,  the  present  treatment  of  the  subject  seems  more  logical  and  more 
in  accordance  with  the  calculation  of  smilar  costs  of  our  other  industries,  treated  in 
other  chapters. 

In  the  article  mentioned  I  assumed  a  royalty  charge  of  40  cents  per  ton.  In  this 
chapter  this  has  been  cut  down  to  20  cents,  the  estimate  made  by  Mr.  Carnegie  as  the 
actual  payments  made  on  the  present  arrangements  by  the  corporation  on  all  its  ores; 
the  change  is  made  on  the  theory  that  the  amortization  of  capital  and  the  depreciation 
of  the  plants  calculated  for  the  mining  properties  are  sufficient  to  cover  the  royalty 
that  a  company  legitimately  charged  itself  with.  In  other  words,  I  am  trying  to 
account  for  the  expenditures  which  it  seems  the  company  actually  makes. 
10 


146  THE  COST  OF  MINING 

The  Iron  Mines. — Let  us  return  to  the  source  of  operations  and  con- 
sider what  iron-ore  resources  the  company  owns.  According  to  the 
reports  of  the  Minnesota  Tax  Commission  the  various  properties  owned 
by  the  Oliver  Iron  Mining  Company  on  the  Mesabi  range  have  in  sight 
920,000,000  tons.  This,  I  believe,  is  an  estimate  only  of  those  ores  which 
are  at  present  merchantable.  The  large  quantities  of  lower-grade  ores 
on  the  western  portion  of  the  Mesabi  range,  which  depend  upon  concen- 
tration for  their  utilization,  have  not,  I  believe,  been  reported.  The 
discoveries  of  this  kind  of  ore  are  very  extensive,  and  as  experiments  have 
gone  to  the  point  of  demonstrating  the  practicability  of  concentrating 
them,  these  ores  should  be  considered  as  a  resource.  What  the  total 
volume  of  such  ores  may  be  I  can  only  guess,  but  I  should  say  that  it 
would  not  fall  far  short  of  300,000,000  tons  of  concentrates,  making  a 
total  of  probable  ore  on  the  Mesabi  range  of  1,220,000,000  tons. 

As  to  the  ore  resources  on  the  old  ranges  I  have  no  means  of  making 
an  estimate.  It  is  to  be  remembered  that  these  mines  extend  to  great 
depths  and  that  the  exploration  of  them  in  advance  is  not  easy,  but  on 
the  other  hand  many  of  them  are  exceedingly  persistent  and  have  already 
been  worked  for  a  great  many  years  with  no  signs  of  exhaustion.  As- 
suming that  these  mines  may  be  counted  on  to  produce  as  much  in  the 
future  as  they  have  in  the  past,  we  get  an  estimate  of  114,000,000  tons  for 
the  old  ranges,  that  is,  outside  of  the  Mesabi  range.  Therefore,  I  would 
estimate,  in  round  numbers,  the  total  ore  resources  of  the  Steel  Corpora- 
tion in  Lake  Superior  at  1,300,000,000  tons. 

It  will  be  seen  that  I  have  estimated  for  the  exploration  and  finding 
of  these  ores,  outside  of  cost  of  mining  plants  in  operation,  $15,000,000. 
This  seems  to  be  an  extremely  moderate  estimate  of  cost  for  putting  in 
sight  such  enormous  reserves,  but  as  far  as  I  can  judge  by  the  inquiries 
that  I  have  made  the  sum  is  somewhere  near  the  mark.  Explorations 
on  the  Mesabi  range  have  been  extraordinarily  fruitful,  and  the  cost  for 
drilling  seems  to  be  not  much  over  1  cent  per  ton  developed. 

Royalties. — A  very  large  proportion  of  the  ores  controlled  by  the 
Steel  Corporation  is  not  held  in  fee,  but  under  leases  on  which  the  company 
pays  a  varying  rate  of  royalty.  This  royalty  has  shown  a  constant 
tendency  to  increase.  Many  of  the  earlier  leases  provide  for  a  royalty 
of  only  25  cents  per  ton  and  the  leases  were  made  for  periods  of  20  years 
or  more.  In  some  cases  these  leases  are  already  near  termination  and 
new  leases  will  have  to  be  made  at  an  advanced  royalty.  Some  of  the 
latest  leases  provide  for  royalties  of  85  cents  per  ton  on  standard  ores 
with  provision  for  still  further  increases. 

It  is  probable  that  under  present  conditions  the  company  pays  an 
average  of  not  over  20  cents  per  ton,  because  a  good  deal  of  its  ores 
are  mined  from  its  own  lands,  but  it  is  manifestly  unfair  to  the  Steel 
Corporation  not  to  allow  for  its  own  land  a  royalty  equal  to  that  which 


COST  OF  MINING  LAKE  SUPERIOR  IRON          147 

it  must  pay  to  other  owners.  On  this  basis  it  is  probable  that  the  actual 
royalty  allowable  on  the  ore  should  be  about  40  cents  per  ton. 

On  the  theory  that  I  have  adopted  for  these  articles,  royalty  is  not 
wholly  an  operating  cost,  but  is  in  a  large  part  a  profit  paid  to  the  owners 
of  lands  out  of  their  exploitation.  Accordingly  I  charge  in  this  estimate 
only  the  20  cents  per  ton  actually  paid  to  other  owners  and  make  up  the 
difference  to  the  Steel  Company  through  the  amortization  of  capital 
invested  in  its  iron  mines  and  explorations. 

Cost  of  Ore  from  Old  Ranges. — At  present  about  two-thirds  of  all 
the  ore  from  Lake  Superior  comes  from  the  Mesabi  range,  but  in  the 
case  of  the  Steel  Corporation  the  proportion  is  over  74  per  cent.  It  is 
probable  that  we  would  not  be  far  wrong  if  we  adopted  a  proportion  of 
70  per  cent,  from  the  Mesabi  range  and  30  per  cent,  from  all  the  others. 
By  making  the  above  division  we  may  make  a  reasonably  close  estimate 
of  the  cost  of  mining  in  the  Lake  Superior  ores  in  general. 

On  the  old  ranges  the  problem  is  essentially  uniform.  That  is  to 
say,  there  is  no  great  difference  in  mining  ore  on  the  Menominee  range, 
or  on  the  Vermilion  range.  In  all  cases  the  work  is  done  entirely  under- 
ground, usually  at  depth  between  500  and  1500  ft.  Individual  mines,  of 
course,  show  great  variations.  In  some  cases  the  ore  is  extremely  hard 
and  in  other  cases  extremely  soft.  Some  mines  have  one  large  body  of 
soft  ore;  others  have  a  number  of  comparatively  small  bodies  of  hard 
ore,  but  these  individual  differences  occur  about  equally  on  all  the  ranges. 

The  cost  may  be  estimated  as  a  function  of  the  output  per  man  per 
day.  In  the  case  of  the  hard-ore  mines,  the  output  per  man  is  as  low 
as  2%  tons  per  man,  while  in  some  of  the  most  favorable  soft-ore  mines 
the  output  exceeds  5  tons  per  man.  Now,  the  average  wages  in  the 
Lake  Superior  region  for  all  men  employed  may  be  calculated  at  $2.60  per 
day.  We  may  further  estimate  that  wages  account  for  approximately 
60  per  cent,  of  the  cost  at  the  mines. 

It  is  probable  that  the  actual  operating  cost  may  be  calculated  at 
the  rate  of  $4.25  per  man  employed.  On  this  basis,  if  a  mine  gets  out 
2%  tons  per  man,  its  operating  cost  will  be  $1.70  per  ton;  if  it  gets  out 
5  tons,  its  cost  will  be  85  cents.  I  believe  the  actual  figures  on  the  average 
would  fall  about  half-way  between  these  extremes,  and  that  the  average 
output  for  the  old  range  mines  would  be  somewhere  near  3^  tons  per 
man.  This  would  give  a  cost  of  about  $1.15  at  the  mines,  exclusive  of 
taxes. 

Costs  on  the  Mesabi  Range. — The  cost  of  mining  on  the  Mesabi 
range  is  determined  almost  absolutely  by  the  depth  of  the  surface  cover- 
ing. If  the  orebody  is  thin  and  the  overlying  surface  deep,  it  is  necessary 
to  mine  the  ore  by  underground  methods.  In  this  case  the  cost  of  mining 
on  the  Mesabi  will  be  approximately  90  cents  per  ton,  the  average  output 
per  man  being  4%  tons. 


148  THE  COST  OF  MINING 

Open-pit  mining  varies  greatly  in  cost.  This  work  is  now  done 
universally  by  means  of  steam  shovels  and  the  difficulty  varies  according 
to  the  proportion  of  overburden  to  ore,  the  texture  of  the  ore,  the  pro- 
portion of  boulders  and  tongues  of  country  rock  in  the  orebody,  and  the 
amount  of  water  to  be  pumped.  These  various  factors  cause  abrupt 
variations  in  the  cost. 

We  may  calculate  that  the  removal  of  stripping  costs  32  cents  per 
yard.  If  one  yard  of  stripping  uncovers  a  yard  of  ore  we  will  have  one 
yard  of  ore  containing  2%  tons  mined  at  a  cost  of  removing  2  yards  of 
material,  or  64  cents,  making  the  mining  cost  25.6  cents  per  ton  of  ore. 
To  this  cost,  however,  must  be  -added  the  interest  on  capital  invested 
in  preliminary  stripping  and  other  costs  of  preliminary  development  of 
the  mine,  the  cost  of  pumping  and  of  certain  general  expenses  that  do 
not  occur  on  the  ground,  so  that  when  equal  amounts  of  stripping  and  of 
ore  are  removed,  I  calculate  that  the  cost  will  be  decidedly  over  30  cents 
per  ton.  This  estimate  does  not  include  the  taxes  which  I  shall  presently 
discuss  separately. 

It  is  evident  that  the  proportion  of  stripping  to  the  ore  does  not  vary 
directly  according  to  the  relative  thickness  of  the  surface  and  the  under- 
lying ore;  it  is  a  function  of  these  factors  combined  with  several  other 
factors.  The  glacial  material  is  usually  much  more  uniform  in  thickness 
than  the  orebodies  underneath.  The  latter  are  usually  trough-shaped 
with  many  irregularities  at  the  sides  and  bottom.  Furthermore,  pits 
must  have  sloping  sides  so  that  in  cases  where  the  depth  of  the  ore 
is  equal  to  that  of  the  overburden  there  will  still  be  a  considerably 
larger  volume  of  overburden  removed  from  the  pit  than  there  will  be  of 
ore.  These  considerations  induce  a  good  deal  of  caution  on  the  part  of 
operators  in  the  question  of  deciding  upon  open-cut  mining  where  the 
overburden  is  deep. 

Open  Cut  vs.  Underground  Mining. — When  the  exact  proportion 
of  stripping  to  ore  can  be  worked  out,  it  is  a  simple  question  of  arithmetic 
to  figure  where  it  will  pay  to  adopt  underground  mining  instead  of  open 
pits.  As  the  cost  of  underground  mining  is  about  90  cents  per  ton,  when 
open-pit  operations  are  cheaper  than  that,  theoretically  the  mining  should 
be  done  by  the  latter  method.  But  a  good  many  considerations  come  in 
to  interfere  with  carrying  this  method  to  its  logical  limits.  Among  these 
may  be  pointed  out  the  necessity  of  investing  a  large  amount  of  money  in 
excavating  the  over-burden  before  mining  can  be  undertaken.  In  the 
case  of  companies  that  are  financially  weak  this  is  a  matter  of  considerable 
importance. 

In  many  cases  where  open-pit  mining  would  have  been  much  cheaper, 
the  ore  has  been  mined  underground  because  the  mine  could  be  opened 
more  rapidly  and  a  certain  profit  more  quickly  realized  even  though  the 
operators  knew  that  they  were  not  securing  the  best  costs.  This  argu- 


COST  OF  MINING  LAKE  SUPERIOR  IRON         149 

ment  does  not  apply  to  the  Steel  Corporation,  of  which  the  capital  is 
abundant  for  undertaking  operations  in  the  most  comprehensive  way. 
As  a  matter  of  fact,  it  is  in  many  cases  resorting  to  open-pit  methods  at 
mines  where  formerly,  under  other  owners,  the  work  was  done  under- 
ground. 

Exigencies  of  Open-Cut  Operations.— At  first  glance  it  would  seem 
as  if  when  a  yard  either  of  ore  or  of  waste  can  be  dug  out  by  steam  shovels 
for  32  cents,  that  the  cost  per  ton  would  be  approximately  13  cents,  and 
that,  therefore,  it  would  be  as  cheap  to  mine  almost  7  tons  in  an  open  pit 
as  it  is  to  mine  1  ton  underground.  In  other  words,  6  tons  of  stripping 
might  be  removed  to  secure  1  ton  of  ore.  This  would  be  the  case  were 
there  no  expense  involved  in  mining  except  the  actual  digging.  As  a 
matter  of  fact,  there  are  other  expenses  that  amount  to  considerable. 
One  of  these,  the  interest  on  the  money  thus  locked  up  in  stripping,  I 
have  already  pointed  out,  but  a  still  more  important  cause  for  hesitation 
in  adopting  open-pit  mining  to  its  full  apparent  limit  is  the  considerable 
variation  in  the  cost  of  steam-shovel  work  in  different  parts  of  the  same 
mine.  Where  the  ores  are  soft  and  uniform  a  steam  shovel  will  undoubt- 
edly dig  a  large  amount  of  ore.  In  some  mines  the  cost  of  digging  ore 
for  a  period  may  go  as  low  as  6  or  7  cents  per  ton,  but  this  may  be  fol- 
lowed by  another  period  when  the  costs  may  be  several  times  as  high. 

For  instance,  in  1906,  at  the  Mountain  Iron  mine  an  output  of 
2,560,000  tons  was  obtained  with  a  force  of  500  men.  The  bulk  of  the 
work  was  done  in  eight  months,. say  200  days.  At  an  average  cost  of  $4.25 
per  man  per  day  we  get  for  this  period  a  total  cost  of  about  $425,000. 
Supposing  that  for  the  remainder  of  the  year  one-half  the  force  was 
occupied,  we  must  increase  the  estimated  cost  by  about  $125,000,  making 
a  total  for  the  year  of  $550,000.  This  equals  21  cents  per  ton.  In 
1907,  with  an  output  of  1,973,000  tons,  1200  men  were  empoyed.  This 
indicates  a  cost  of  more  than  65  cents  per  ton. 

A  part  of  the  increase  was  due,  no  doubt,  to  an  additional  volume  of 
the  stripping  undertaken,  but  a  considerable  part  of  the  increlase  cannot 
thus  be  explained.  In  the  orebody  itself  changes  were  encountered  that 
not  only  diminished  greatly  the  output  per  steam  shovel,  but  also  greatly 
increased  the  number  of  men  employed  per  shovel.  Up  to  1906  the  total 
number  of  men  required  in  shops,  train  crews,  track  laborers,  etc.,  per 
steam  shovel  never  exceeded  75;  since  then  it  has  been  100. 

The  reasons  for  this  are:  (1)  The  ore  itself  has  become  much  harder, 
frequently  breaking  into  great  slabs  and  chunks  that  have  to  be  sledged 
to  make  them  suitable  for  reduction  in  the  blast  furnace.  (2)  Owing  to 
the  irregularity  of  the  bottom  of  the  deposit  it  is  often  impossible  to 
provide  adequate  working  faces  for  the  steam  shovels,  so  that  along 
the  bottom  and  sides  the  shovels  frequently  have  to  take  shallow  cuts, 
and  sometimes  the  shovels  suddenly  run  into  worthless  bars  of  rock. 


150  THE  COST  OF  MINING 

When  the  last  occurs,  the  machine  must  be  moved  to  a  new  working 
place.  (3)  Boulder-like  masses  of  worthless  country  rock  occur  in  the 
ore  which  must  be  removed  as  waste.  In  a  word  the  excavation  of  ore 
by  steam  shovels,  after  the  stripping  is  all  done,  may  be  much  more 
expensive  than  is  popularly  believed. 

Unwatering  the  Open  Pits. — The  cost  of  pumping  must  be  fully  as 
high  for  open-pit  as  for  underground  mining  and  must  be  kept  up  just 
as  steadily.  The  great  pits  form  catchment  basins,  often  many  scores 
of  acres  in  extent,  and  in  the  event  of  heavy  rains,  which  are  far  from  un- 
common on  the  Mesabi  range,  the  volume  of  water  is  often  so  great  as  to 
cause  work  to  be  suspended.  Fortunately  the  ore  is  porous  so  that  the 
pumping  may  all  be  done  from  a  single  shaft  so  located  as  to  provide 
for  the  drainage  of  the  entire  orebody  for  all  times.  The  volume  of 
water  ejected  from  a  single  orebody  is  frequently  5000  to  6000  gal.  per 
minute.  I  estimate  that  when  5000  gal.  per  minute  is  pumped  from  a 
depth  of  300  ft.  and  the  output  is  1,500,000  tons  per  year,  the  cost  of 
pumping  will  be  7  or  8  cents  per  ton.  I  suppose  this  is  about  a  maximum 
cost  for  the  Mesabi. 

Now,  returning  to  the  question  of  where  open-pit  work  should  end 
and  underground  mining  should  begin,  we  find  that  the  conditions  are 
about  as  follows:  The  actual  cost  of  digging  ore  in  a  pit  where  the  ore 
is  hard  and  sorting  is  necessary  may  run  up  as  high  as  40  or  50  cents  per 
ton.  This  cost  will  be  reached  when  a  steam  shovel  with  a  crew  of  100 
men  at  an  average  cost  of  $4.25  per  day  digs  20  cars,  or  between  800  and 
1000  tons  per  day.  The  cost  will  not  exceed  50  cents  per  ton,  because 
ore  can  be  sorted  and  loaded  as  cheaply  as  that  by  hand  without  any 
steam  shovel.  Let  us  then  put  50  cents  per  ton  as  a  maximum  cost  for 
digging. 

The  cost  of  administration,  interest  on  development  capital  (largely 
stripping),  and  of  pumping,  is,  of  course,  variable.  Where  500,000  or 
more  tons  are  mined  in  a  year,  all  these  expenses  combined  are  not 
likely  to  exceed  15  cents.  At  the  worst,  then,  we  have  65  cents  per  ton 
as  the  cost  of  mining  in  open  pits,  outside  of  stripping.  Now,  as  under- 
ground mining  will  cost  90  cents  per  ton,  we  have  the  difference  between 
90  cents  and  65  cents  to  invest  in  stripping.  This  25  cents  will  remove  2 
tons  of  overburden. 

I  therefore  conclude  that  it  will  pay  to  remove  2  tons  of  overburden 
to  1  ton  of  ore,  under  the  least  favorable  mining  conditions.  Under  the 
most  favorable  conditions,  where  both  the  ore  and  the  overburden  are 
soft  and  uniform,  the  economical  proportion  may  rise  as  high  as  4  or 
even  5  to  1. 

Average  Cost  of  Mining  on  the  Mesabi  Range. — This  is  a  point  on 
which  no  one  can  get  exact  information  without  access  to  the  cost  state- 
ments of  at  least  fifty  different  properties,  but  in  a  general  way  I  think 


COST  OF  MINING  LAKE  SUPERIOR  IRON  151 

we  can  get  a  rough  estimate  that  will  be  sufficient  for  practical  purposes. 
It  will  appear  that  the  actual  mining  cost  of  the  ore  at  the  mines  is  not, 
after  all,  one  of  the  greatest  factors  in  the  final  cost  of  producing  pig  iron. 

Returning  to  our  output  per  man  per  day  as  a  basis  for  calculating 
costs  I  find  that  during  1907  the  mines  of  the  Steel  Corporation  in  the 
Hibbing  district  produced  approximately  9,000,000  tons  of  ore.  This 
ore  came  largely  from  great  open-pit  properties,  but  some  of  it  came 
from  underground  mines.  I  am  informed  that  the  total  number  of  men 
employed  was  about  4500  with  60  steam  shovels.  Supposing  that  the 
whole  of  this  force  was  employed  for  eight  months,  and  half  of  it  for  the 
remaining  four  months  of  the  year,  and  assuming  that  26  working  days 
constitute  a  month,  we  get  an  equivalent  of  260  days  with  4500  men, 
each  costing  $4.25.  This  gives  us  a  total  of  approximately  $5,000,000, 
or  in  round  numbers,  55  cents  per  ton. 

This  estimate  is  open  to  doubt  on  several  points,  two  of  which  are 
whether  the  amount  of  stripping  that  was  done  kept  pace  with  or  ex- 
ceeded the  amount  of  ore  extracted,  and  whether  the  rough  figures  of 
labor  employed  are  actually  near  the  truth. 

As  to  these  facts  I  have  no  means  of  judging  except  the  most  general 
impressions,  but  I  am  satisfied  that  at  the  worst  my  information  is  not 
far  enough  astray  to  make  the  cost  hopelessly  inaccurate.  In  a  general 
proposition  of  this  kind  no  one  attempts  to  get  down  to  niceties,  and 
there  is  no  occasion  for  it.  When  I  state  that  the  average  ore  mined 
in  the  Hibbing  district  costs  55  cents  per  ton,  I  may  be  15  or  20  per  cent, 
astray  this  year,  and  next  year  I  may  be  right. 

The  mines  of  Hibbing  undoubtedly  are  the  most  favorable  on  the 
Mesabi  range  for  cheap  costs.  They  have  the  largest,  softest,  and  most 
uniform  orebodies,  and  are  worked  on  the  largest  scale.  It  does  not 
seem  improper,  therefore,  that  if  we  estimate  the  cost  at  55  cents  per  ton 
at  Hibbing,  we  should  increase  this  to  60  cents  for  the  whole  range.  I 
therefore  estimate  that  the  average  cost  of  mining  on  the  Mesabi  range 
for  both  underground  and  surface  is  about  60  cents  per  ton,  exclusive  of 
taxes. 

Taxes. — The  laws  of  Minnesota  tax  mining  properties  for  what  ore 
they  have  in  sight.  The  tonnage  developed  is  reported  by  the  mining 
companies  to  the  assessor,  who  puts  a  valuation  upon  it  according  to  the 
quality  and  accessibility  of  the  ore.  For  purposes  of  taxation,  discovered 
ores  are  placed  in  five  or  six  different  grades  with  a  minimum  valuation 
of  8  cents  per  ton  and  a  maximum  of  33  cents.  Roughly,  the  ore  devel- 
oped seems  to  average  about  15  cents  per  ton  in  valuation.  This  valua- 
tion is  taxed  just  as  any  other  assessed  property  is  taxed,  the  levy  being 
somewhere  in  the  neighborhood  of  lj^  per  cent. 

Since  the  Steel  Corporation  has  in  Minnesota  on  the  Mesabi  and 
Vermilion  range  about  930,000,000  tons  on  the  assessors'  lists,  it  would 


152  THE  COST  OF  MINING 

appear  that  the  total  valuation  would  be  somewhere  in  the  neighborhood 
of  $140,000,000  and  the  taxation  approximately  $2,000,000.  On  this 
basis  we  find  that  the  company  must  pay  on  its  present  output  of  approxi- 
mately 18,000,000  tons,  more  than  10  cents  per  ton  on  its  actual  shipments. 

This  taxation  is  a  recent  development.  I  do  not  believe  that  the 
company  has  as  yet  actually  paid  so  much,  but  on  a  basis  of  present  and 
future  conditions  it  does  not  seem  like  an  excessive  estimate.  The  fair- 
ness of  this  mode  of  taxation  it  is  not  my  present  purpose  to  discuss,  but 
it  is  very  evident  that  a  company  with  large  ore  reserves  and  a  small 
output  may  be  taxed  much  more  than  a  company  with  a  large  output 
and  small  ore  reserves.  For  instance,  if  the  Steel  Corporation  had  only 
five  years'  ore  in  sight  instead  of  50  years,  its  taxes  in  its  present  tonnage 
would  be  only  1  cent  per  ton  instead  of  10  cents.  For  this  reason  there 
are  probably  vast  differences  in  the  tax  rates  of  various  companies  in  the 
Mesabi  range,  and  I  suppose  the  Steel  Corporation  undoubtedly  pays 
more  taxes  per  ton  of  output  than  any  of  the  others. 

Explorations  and  Maps. — It  may  be  interesting  to  digress  for  a  mo- 
ment to  consider  the  value  of  combination  in  the  operation  of  these 
mines.  Since  its  organization  the  Steel  Corporation  has  pursued  a  most 
complete,  scientific,  and  satisfactory  plan  of  exploring  and  mapping  its 
ore  reserves.  It  has  employed  expert  geologists  and  engineers  for  this 
purpose.  It  has  secured  as  much  land  as  it  could  for  exploration  and 
has  explored  it  to  the  point  of  determining,  before  any  mining  is  done, 
the  situation,  volume,  shape,  and  economic  characteristics  of  the  ore- 
bodies  on  large  tracts. 

In  other  words,  the  process  of  drilling  and  test-pitting  has  been 
carried  on  until  the  depth  of  surface,  the  quality  of  the  ore,  its  probable 
admixture  with  boulders  and  tongues  of  barren  rock,  and  its  thickness 
have  all  been  determined.  This  information  is  expressed  on  maps  which 
show  the  contours  not  only  of  the  surface  of  the  land,  but  also  of  the  sur- 
face of  the  orebody  underlying  the  glacial  drift  and  the  contours  of  the 
bottom  of  the  orebody. 

The  information  permits  the  planning  of  the  mining  work  in  such  a 
way  that  there  shall  be  no  duplication  of  effort.  The  drainage  of  an 
orebody  can  be  provided  for  with  a  single  shaft  so  situated  that  it  reaches 
the  bottom  of  the  deposit.  The  problem  of  mining  is  solved  beforehand. 
In  other  words,  the  propriety  of  mining  in  open  pits  or  underground 
is  predetermined.  The  location  of  pits,  of  dumping  grounds,  of  railroad 
tracks  and  of  all  equipment  is  established  once  for  all. 

Drawbacks  of  Individual  Management. — Now,  suppose  these  same 
orebodies  were  to  be  mined  by  different  companies  as  was,  or  would 
have  been,  the  case  twenty  years  earlier.  The  orebodies  are  sometimes 
a  mile  or  even  two  miles  in  length  and  quite  irregular  in  outline.  The 
ordinary  course  of  the  longest  axis  of  an  orebody  is  northwest  and  south- 


COST  OF  MINING  LAKE  SUPERIOR  IRON          153 

east,  so  that  it  would  cross  the  subdivisions  of  the  land  diagonally.  Such 
an  orebody  would  inevitably  occur  on  several  sections,  quarter  sections, 
or  40-acre  tracts.  The  land  ownership  is  scattered  and  irregular.  It  is 
seldom  that  any  tract  belonging  to  a  single  owner  is  larger  than  160 
acres  and  many  tracts  are  only  40  acres  in  area.  As  a  matter  of  fact 
most  of  the  great  orebodies  on  the  Mesabi  range  belonged  originally  to 
five  or  six  different  companies. 

In  such  a  case  it  is  evident  that  each  company  would  have  its  indi- 
vidual management,  its  own  problem  of  finance,  and  its  own  requ're- 
ments  in  the  way  of  output.  The  mine  located  on  one  particular 
40-acre  tract  might  find  the  surface  only  20  ft.  deep,  and  it  would  plan  an 
open  pit.  Since  the  neighboring  ground  was  seldom  thoroughly  explored, 
the  waste  from  this  open  pit  might  very  likely  be,  and  indeed  was  in 
many  cases,  dumped  on  ground  afterward  proved  to  be  ore-bearing. 

The  next  mine  on  the  same  orebody  might  find  the  surface  to  be 
locally  100  ft.  deep,  and  if  the  operating  company  were  poor  and  in  a 
hurry  for  ore,  it  would  undoubtedly  open  up  its  mine  underground. 
The  result  of  this  would  be  that  large  sections  of  the  surface  would  be 
caved  down  into  the  middle  of  the  ore,  thus  preventing  forever  the  suc- 
cessful stripping  of  that  part  of  the  orebody. 

Economy  of  Large  Ownership. — But  if  this  whole  orebody  were  in 
the  possession  of  the  Steel  Corporation,  its  explorations  might  show 
that  the  surface  averaged  about  50  ft.  and  that  it  might  be  economical 
to  mine  all  the  ore  by  an  open  pit.  A  single  pump  shaft  would  be  suf- 
ficient. No  waste  would  be  dumped  on  neighboring  ore-bearing  ground. 
In  short,  a  vast  amount  of  duplicated  expense  would  be  avoided.  This 
is  where  the  value  of  such  a  combination  comes  in. 

The  Steel  Corporation  cannot  get  its  work  done  any  cheaper  than 
anybody  else.  If  it  has  to  sink  a  shaft,  for  instance,  it  cannot  do  it 
any  cheaper  than  any  one  of  the  half  dozen  mines  that  it  might  replace, 
but  it  could  on  the  average  sink  one  shaft  for  one-sixth  the  expense  that 
it  would  cost  other  people  to  sink  six  shafts. 

It  is  worth  remarking  in  this  connection  that  the  Steel  Corporation 
has  been  magnificently  managed.  It  has  not  striven  for  minute  and 
near-sighted  economies.  It  has  not  tried  to  outdo  its  rivals  in  points 
of  local  rivalry,  but  it  has  kept  in  mind  the  broad  outline  of  its  operations 
and  has  tried  to  make  use  of  its  capital  and  opportunities  in  ways  that 
every  fair-minded  man  would  recognize  as  legitimate.  The  company 
can  do  this  only  as  long  as  it  is  Well  managed,  but  up  to  the  present  it  is 
only  fair  to  say  that  its  activities  have  been  well  directed  and  that  its 
economies  are  such  as  to  be  certainly  of  no  disadvantage  to  the  public 
at  large,  but  on  the  contrary  in  many  ways  a  great  benefit. 

Total  Cost  of  all  Lake  Superior  Ores. — In  order  to  keep  the  proportion 
of  things  in  mind,  even  at  the  expense  of  some  repetition,  we  may  state 


154  THE  COST  OF  MINING 

that  the  cost  of  mining  Lake  Superior  iron  ores  is  for  Mesabi  ores,  $0.60; 
old  range  ores,  $1.15  a  ton.  Since  the  Steel  Corporation  mines  about 
7  tons  of  ore  on  the  Mesabi  range  for  over  3  tons  mined  on  the  old  ranges, 
we  may  calculate  that  the  actual  cost  of  10  tons  would  be  $7.65  or  76 J^ 
cents.  To  this  we  must  add  taxes  which  on  the  Mesabi  range  are  not 
far  short  of  10  cents  per  ton.  In  order  to  make  a  round  figure  we  may 
state  that  all  Lake  Superior  ores  would  cost  on  the  ground  about  85 
cents  per  ton,  including  taxation.  To  this  we  may  add  20  cents  per  ton 
for  royalty,  making  the  total  cost  of  Lake  Superior  iron  ores  at  the  mine, 
ready  for  shipment,  $1.05  per  ton. 

Transportation  of  Ores. — The  ores  which  are  mined  on  both  shores 
of  Lake  Superior,  either  in  northern  Wisconsin  and  Michigan  or  in 
Minnesota,  must  all  be  transported  to  the  region  lying  south  of  the  Great 
Lakes  for  smelting.  The  region  of  iron  manufacture  extends  from  the 
neighborhood  of  Chicago  and  Milwaukee  at  the  northwest,  eastward 
in  a  widening  belt  to  Pittsburg  and  Buffalo  and  thence  east  to  the  neigh- 
borhood of  New  York  City. 

The  factors  which  dictate  the  production  of  pig  iron  in  this  region 
are  two,  namely,  the  presence  of  coal  and  facilities  for  distribution. 
If  we  take  Pittsburg  as  the  most  active  and  central  point  in  iron  manu- 
facture to  represent  average  conditions  we  find  that  the  ores  must 
be  transported  about  1000  miles  in  three  sections:  (1)  There  is  the 
land  haul  from  the  mine  to  Lake  Superior  ports;  (2)  the  lake  haul 
from  Lake  Superior  to  Lake  Erie;  (3)  the  land  haul  from  Lake  Erie  to 
Pittsburg. 

The  first  division  of  the  work  is  covered  by  five  or  six  different  roads — 
three  in  Minnesota  and  the  remainder  in  Michigan  and  Wisconsin. 
The  length  of  haul  is  variable;  from  Ely,  Minn.,  on  the  Vermilion  range 
to  Two  Harbors,  the  distance  is  about  90  miles.  Most  of  the  ore 
from  the  Mesabi  range  has  to  be  hauled  from  70  to  100  miles,  so  that  I 
suppose  an  average  distance  for  the  north  shore  roads  is  perhaps  80 
miles.  Most  of  the  ore  on  the  Marquette  range  is  less  than  20  miles 
distant,  while  that  on  the  Menominee  range  is  bout  50,  and  from  the 
Gogebic  range  the  distance  is  only  about  30  or  40  miles  to  the  harbor. 

The  published  rates  on  ore  from  mines  in  Minnesota  to  the  lakes  is 
uniformly  80  cents  per  ton;  from  the  Gogebic  range  to  Ashland,  40  cents; 
from  the  Menominee  range  to  Escanaba  40  cents,  and  from  the  Marquette 
range  to  Marquette,  25  cents.  In  the  case  of  any  company  other  than 
the  Steel  Corporation  it  would  be  necessary  to  take  these  rates  at  their 
face  value,  but  in  this  case  there  is  reason  to  believe  that  the  transporta- 
tion is  the  most  profitable  part  of  the  business. 

The  company  does  not  own  any  railroads  on  the  southern  shore, 
but  its  two  railroads  on  the  northern  shore,  namely,  the  Duluth  &  Iron 
Range  and  the  Duluth,  Missabe  &  Northern,  haul  about  52  per  cent. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  155 

of  the  ore  produced  in  the  entire  region.  The  corporation  also  owns  a 
fleet  of  boats  on  the  lakes,  probably  sufficient  to  transport  an  equal 
amount.  It  also  owns  the  Pittsburg,  Bessemer  &  Lake  Erie  railroad, 
which  hauls  most  of  the  ore  to  Pittsburg.  I  think  we  shall  not  be  far 
wrong  if  we  assume  that  so  far  as  costs  go  the  results  are  the  same  as  they 
would  be  if  the  company  transported  all  its  own  ore  from  the  Minnesota 
mines  to  the  furnaces. 

While  the  freight  on  ores  from  the  south  shore  to  Pittsburg  is  un- 
doubtedly less  than  that  from  Minnesota,  it  is  also  true  that  the  Steel 
Corporation  must  pay  on  ore  transported  from  those  ranges  a  profit 
to  independent  railroad  companies  which  it  does  not  pay  in  the  case  of 
Minnesota  ores.  Its  profits  on  Minnesota  ores  which  it  hauls  for  other 
companies  probably  more  than  counterbalance  the  amount  it  pays 
in  profits  to  others  on  the  Michigan  ores. 

Automatic  Handling  of  Ore. — Iron  ore  is  about  the  most  easily  handled 
material  in  the  world.  Its  specific  gravity  is  high,  so  that  the  ton  does  not 
occupy  much  bulk,  and  it  is  absolutely  uninjured  by  the  roughest  treat- 
ment. As  a  matter  of  fact,  it  is  loaded  directly  into  dump  cars  either  by 
the  steam  shovels  or  directly  from  the  mine  shafts.  It  is  made  up  in  trains 
of  approximately  2000  tons  of  net  freight  and  hauled  over  roads  of  very 
slight,  or  no  adverse  gradients  to  the  lake  docks.  There  it  is  dumped  by 
gravity  right  into  the  hold  of  the  ship  and  transported  in  large  cargoes 
on  waters  that  are  generally  tranquil,  and  unloaded  by  machinery 
at  the  lower  lake  ports,  to  be  again  delivered  to  the  dump  cars  and  carried 
as  before  to  the  furnaces. 

I  believe  the  operating  cost  of  hauling  such  material  by  rail  cannot 
exceed  %  cent  per  ton  per  mile.  On  this  basis  transportation  from  the 
mines  to  Duluth  would  cost  about  20  cents,  and  from  Lake  Erie  to  Pitts- 
burg about  40  cents  per  ton,  making  a  total  for  rail  haul  of  60  cents. 
The  lake  freight  in  all  probability  will  cost,  including  unloading,  an 
average  of  about  40  cents.  Thus  we  have  a  total  transportation  cost  of 
$1  per  ton  from  the  mines  to  Pittsburg.  This,  of  course,  is  merely 
operating  cost,  and  does  not  include  the  necessary  return  on  the  capital 
invested  in  the  transportation  properties,  but  this  item  I  propose  to  con- 
sider as  a  lump  to  be  added  to  the  cost  of  pig  iron  so  that  I  will  not  discuss 
it  here. 

We  have,  then,  ore  delivered  at  the  furnaces  at  Pittsburg  at  a  total 
cost  of  $2.05  per  ton,  distributed  as  follows:  Mining,  85  cents;  royalty, 
20  cents;  transportation,  SI. 

Cost  of  Coke. — Without  going  into  details,  I  think  it  would  be  fair  to 
estimate  the  cost  of  Connellsville  coke  to  the  Steel  Corporation  at  about 
$1.40  per  ton.  This  is  on  a  basis  of  70  cents  per  ton  for  mining  the  coal 
and  using  1^  tons  of  coal  per  ton  of  coke  at  a  coking  cost  of  35  cents. 
The  freight  rate  from  Connellsville  to  blast  furnaces  at  Pittsburg  is 


156  THE  COST  OF  MINING 

75  cents  per  ton,  so  that  we  may  calculate  coke  delivered  at  the  furnace 
at  $2.15. 

Cost  of  Producing  Pig  Iron. — It  is  not  probable  that  the  average  Lake 
Superior  ore  of  to-day  will  yield  much  over  50  per  cent,  in  pig  iron  before 
moisture  is  deducted.  Since  the  tendency  is  toward  a  gradual  reduction 
in  the  grade  of  the  ore,  it  does  not  seem  far  out  of  the  way  to  assume  that 
two  tons  will  be  required  for  each  ton  of  pig  iron.  We  may  now  calculate, 
when  an  average  output  of  10,000,000  tons  of  pig  per  year  is  made,  the 
cost  to  be  as  follows:  Use  of  capital,  $3.77;  2  tons  of  iron  ore  at  $2.05, 
$4.10;  1.2  tons  coke  at  $2.15,  $2.58;  limestone  for  flux,  50  cents;  labor 
and  maintenance  at  furnaces,  $1.40;  general  expense,  25  cents;  total  cost 
at  Pittsburg,  $12.70;  freight  from  Pittsburg  to  New  York,  $2.60;  total 
cost  at  New  York,  $15.30. 

An  interesting  commentary  on  the  correctness  of  these  figures  is  the 
testimony  of  Judge  Gary  in  the  tariff  hearings  before  the  Ways  and  Means 
Committee  of  the  House  of  Representatives.  Mr.  Gary  gives  costs 
for  the  year  1906  for  all  the  furnaces  of  the  United  States  Steel  Corpora- 
tion. His  figures  are  those  not  of  actual  cost,  but  of  market  prices  for 
fron  ores,  coke,  and  transportation. 

The  figures  are  as  follows:  Iron  ore  at  $4.70  per  ton;  cost  of  ore  used 
in  a  ton  of  pig  iron,  $8.62;  coke  at  furnace,  $3.93  per  ton;  coke  used  in 
making  a  ton  of  pig  iron,  $4.15;  limestone  per  ton,  $1.06;  limestone  in 
pig  iron,  49  cents;  scrap,  cinder,  and  scale,  27  cents;  labor  and  main- 
tenance at  furnaces,  $1.37;  depreciation  of  furnaces,  40  cents;  total 
cost  of  making  a  ton  of  pig  iron,  $15.30. 

From  these  figures  Mr.  Gary  makes  the  following  deductions  for  net 
profits:  On  ores  in  pig  iron,  $2.04;  on  coke  in  pig  iron,  60  cents;  on 
transportation,  $1.07;  total  deductions,  $3.71.  Subtracting  this  amount 
we  have  by  Judge  Gary's  estimate  $11.59  per  ton  as  the  cost  of  pig  iron 
at  the  furnaces. 

MR.  GARY'S  FIGURES  IN  DETAIL 

Actual  cost  of  iron  mining  at  all  mines $  0 .  73 

Actual  cost  of  coke  at  ovens 1.21 

Actual  cost  of  iron  ore  at  furnace 2 . 83 

Actual  cost  of  coke  at  furnace 3. 39 

Pig  Iron: 

Iron  ore  per  ton  pig 5 .  50 

Coke  per  ton  pig • 4.07 

Limestone 0 . 49 

Cinder  and  scale 0.27 

Operating  blast  furnaces 1 . 38 

$11.71 
Depreciation  of  blast  furnace 0 . 40 

$12.11 


COST  OF  MINING  LAKE  SUPERIOR  IRON 


157 


There  is,  however,  some  doubt  as  to  the  exact  application  of  the 
figures  presented  by  Mr.  Gary.  Any  one  who  is  familiar  with  testimony 
taken  at  a  hearing  will  understand  why  this  is  so.  I  have  gone  over  the 
evidence  and  put  together  the  figures  in  another  way.  I  do  not  know 
which  is  the  most  accurate. 

These  figures  omit  general  expenses,  which,  it  is  explained,  are  kept 
in  a  separate  account. 

It  will  be  noted  that  with  this  explanation  the  sum  total  of  Mr. 
Gary's  figures  are  not  far  from  my  independent  estimates.  It  is  to  be 
pointed  out,  however,  that  Mr.  Gary's  figures  are  for  all  the  furnaces 
of  the  company,  while  mine  are  for  Pittsburg  alone.  This  fact  will 
make  a  divergence  in  the  details  unavoidable.  Furthermore,  my  figures 
are  for  general  conditions  as  they  are,  while  Mr.  Gary's  are  exact  state- 
ments for  a  single  year.  After  giving  the  matter  considerable  thought  I 
have  decided  to  leave  my  estimates  as  originally  made.  They  will  at 
least  serve  to  show  something  of  the  logic  of  calculating  costs, 

Statistical  Record  of  the  U.  S.  Steel  Corporation. — It  was  stated  in 
the  foregoing  that  the  Steel  Company  is  as  much  a  manufacturing  as  a 
mining  concern.  While  the  principal  motive  of  this  work  is  to  obtain 
figures  on  the  cost  of  mining,  it  will  be  interesting,  nevertheless,  to  give 
some  idea  of  the  entire  business  of  this  company,  including  the  data  upon 
which  the  above  discussion  is  based. 

The  following  table  gives  the  total  production  of  the  various  products 
since  the  beginning  of  the  company: 

Tenn.  C.  and  I.  not  included 


Products 

1902  to  1907 
inclusive, 
tons 

Average, 
tons 

Iron  Ore  Mined: 
From  Marquette  range  

7,806,000 

1,301,000 

From  Menominee  range 

11,340,000 

1,890,000 

From  Gogebic  range  
From  Vermilion  range 

9,766,000 
10,129,000 

1,628,000 
1,188,000 

From  Mesabi  range 

64,421,000 

10,736,000 

Total 

103,462,000 

16,743,000 

Coke  manufactured          .  .                                  .            

66,744,000 

11,124,000 

Coal  mined,  not  including  that  used  in  making  coke 

9,786,000 

1,631,000 

Limestone  quarried  ....                                    

11,126,000 

1,854,000 

Blast-  Furnace  Products  : 
Pig  iron  

53,767,000 

8,961,000 

Spiegel  .  . 

789,000 

131,000 

Ferro-manganese  and  silicon 

327,000 

54,500 

Total  

54,883,000 

9,146,500 

158 


THE  COST  OF  MINING 
TABLE — Continued 


Steel  Ingot  Production: 
Bessemer  ingots  

41,387,000 

6,894,000 

Open-hearth  ingots     . 

24,536  000 

4  089  000 

Total  .  .  . 

65  923  000 

10  983  000 

Rolled  and  other  Finished  Products  for  Sale  : 
Steel  rails  

10,541,000 

1,757,000 

Blooms,  billets,  slabs,  sheet,  and  tin  plate  bars  

5,317,000 

886,000 

Plates  

4,068,000 

678,000 

Heavy  structural  shapes  

2,370,000 

395,000 

Merchant  steel,  skelp,  hoops,  bands,  and  cotton  ties  .... 
Tubing  and  pipe  ... 

6,006,000 
5,277,000 

1,001,000 
879,000 

Rods  

1  151,000 

192  000 

Wire  and  products  of  wire  

7,640,000 

1,273,000 

Sheets  —  Black,  galvanized,  and  tin  plate  
Finished  structural  work 

5,390,000 
3,077,000 

898,000 
513,000 

Angle  and  splice  bars  and  joints  

873,000 

145,000 

Spikes,  bolts,  nuts,  and  rivets  

344,000 

57,000 

Axles  

840,000 

140,000 

Sundry  iron  and  steel  products 

270,000 

45  000 

Total... 

53  164,000 

8  859  000 

Spelter  

167  000 

28  000 

Copperas  *  (sulphate  of  iron) 

111,000 

18  000 

Universal  Portland  cement  .  . 

Bbls. 
7,611,000 

Ibis. 

1.268,000 

Production. — The  production  of  the  several  subsidiary  properties 
for  the  year  1908,  in  comparison  with  the  results  for  the  year  1907,  is 
shown  in  the  subjoined  table.  In  order  to  make  the  comparison  upon 
relatively  the  same  basis,  the  production  figures  of  the  Tennessee  Coal, 
Iron  &  Railroad  Company  for  the  entire  year  1907  have  been  included 
in  the  results  shown  in  table  on  the  following  page  for  that  year: 


Products 

1908, 
tons 

1907, 
tons 

Iron  Ore  Mined  in  Lake  Superior  Ore  Region  : 
Marquette  range  

830,087 

1,170,496 

Menominee  range.  . 

1,021,598 

1,625,358 

Gogebic  range  

1,078,025 

1,425,457 

Vermilion  range  

927,206 

1,724,217 

Mesabi  range  

11,272,397 

16,458,273 

Iron  Ore  Mined  in  Southern  Ore  Region: 
Tennessee  Coal,  Iron  &  R.  R.  Go's  mines  

1,533,402 

1,576,757 

Total  

16,662,715 

23,980,558 

COST  OF  MINING  LAKE  SUPERIOR  IRON 


159 


Products 

1908, 
tons 

1907, 
tons 

Coke  Manufactured: 
Bee-hive  ovens  

7,591  062 

12  716  013 

By-products  ovens  

578,869 

828,751 

Total 

8  169  931 

13  544  764 

Coal  mined,  not  including  that  used  in  making  coke 

3  008  810 

3  550  510 

Limestone  quarried 

2  186  007 

3  201  222 

Blast-  Furnace  Products: 
Pig  iron 

6  810831 

11  234  447 

Spiegel.  . 

74,716 

130  554 

Ferro-manganese  and  silicon 

48861 

57  794 

Total 

6  934  408 

11  422  795 

Steel  Ingot  Production: 
Bessemer  ingots 

4  055  275 

7  556  460 

Open-hearth  ingots  

3,783,438 

5  786  532 

Total  

7,838,713 

13,342  992 

Rolled  and  Other  Finished  Steel  Products  for  Sale: 
Steel  rails 

1,050  389 

1879  985 

Blooms,  billets,  slabs,  sheet,  and  tin  plate  bars  

551,106 

761,195 

Plates 

312,470 

894  364 

Heavy  structural  shapes  

313,733 

587  954 

Merchant  steel,  skelp,  hoops,  bands,  and  cotton  ties  
Tubing  and  pipe 

577,591 
654  428 

1,338,833 
1  174  629 

Rods.                

93,406 

126,095 

Wire  and  products  of  wire  .  . 

1,275  785 

1  481  226 

Sheets  —  Black,  galvanized,  and  tin  plated  

770,321 

1,070,752 

Finished  structural  work 

403,832 

719  887 

Angle  and  splice  bars  and  other  rail  joints  

84,669 

195,157 

Spikes,  bolts,  nuts,  and  rivets  

40,252 

67,991 

Axles  

24,057 

189,006 

Sundry  steel  and  iron  products  

54,893 

77,463 

Total  

6,206,932 

10,564,537 

Spelter  

28,057 

31,454 

Sulphate  of  iron 

26,411 

24,540 

Universal  Portland  cement  

Bbls. 
4,535,300 

Bbls. 
2,129,700 

The  corporation  has  been  engaged  from  the  beginning  not  only 
in  managing  and  operating  the  plants  with  which  it  began,  but  in  adding 
thereto  and  expanding  its  business.  The  table  on  the  following  page, 
from  the  report  for  1908,  shows  the  estimate  put  upon  the  increase  of 
capital  by  the  officers  of  the  company. 

Regarding  these  increases  of  capacity,  it  will  be  observed  that  no  esti- 
mate is  made  of  the  increase  for  the  property  as  a  whole.  In  blast- 
furnace products  the  increase  is  100  per  cent.;  in  steel  ingots  over  80 
per  cent.;  in  finished  products,  66%  per  cent.;  and  in  cement,  1100  per 


160 


THE  COST  OF  MINING 


COMPARATIVE  ANNUAL  PRODUCTIVE  CAPACITY 
April  1,  1901,  and  January  1,  1909 


.     .  .  , 

Capacity 
April  1, 
1901, 
tons 

Increase  since  April  1,  1901 

Capacity 
January  1, 
1909, 
tons 

By  purchase 
of  Union 
and 
Clairton 
Cos., 
tons 

By  purchase 
of  T.  C.,  I.  & 
R.  R.  Co., 

tons 

Due  to  addi- 
tions and  im- 
provements 
made  by  the 
companies 
after  their 
acquirement 
by  U.  S. 
Steel  Corpn., 
tons 

Blast-furnace  products  
Steel  ingots  
Rolled  and  other  steel  and 

7,400,000 
9,425,000 

1,228,000 
1,258,000 

1,000,000 
500;000 

5,322,000 

5,887,000 

14,990,000 
17,070,000 

iron  products  for  sale  .... 
Cement  .  . 

7,719,000 
Bbls. 
500,000 

1,103,000 

400,000 

3,678,000 
Bbls. 
5,600,000 

12,900,000 
Bbls. 
6,100,000 

cent.  Which  of  these  is  most  representative  of  the  business  of  the  corpo- 
ration? No  statement  is  made  as  to  the  increases  in  natural  resources. 
Considering  the  fact  that  the  company's  business  as  a  finality  resolves 
itself  principally  into  the  sale  of  finished  iron  and  steel  products,  it  seems 
most  reasonable  to  take  the  increase  of  capacity  in  that  particular  as 
representing  most  nearly  the  increase  in  the  company's  whole  business. 

Let  us  assume,  therefore,  that  the  producing  capacity  of  the  properties 
has  been  increased  by  two-thirds  since  the  organization. 

What  this  increase  has  cost  is  exhibited  by  the  following  table: 

"  Since  the  organization  of  the  corporation  there  have  been  expended  for 
additional  property  and  construction  (exclusive  of  the  cost  at  date  of  acquire- 
ment of  Union  Steel  and  Clairton  Steel  Companies,  and  of  the  stock  of  Tenessee 
Coal,  Iron  and  Railroad  Company)  the  following  amounts : 

For  account  of  the  Gary,  Indiana,  Plant,  including  the  building  of 

the  city  of  Gary  and  terminal  railroad  work $  42,797,229. 57 

For  account  of  the  manufacturing  properties  (including   expendi- 
tures by  U.  S.  Steel  Corporation) 116,155,559. 41 

For  account  of  the  coke  and  coal  properties 20,056,764.27 

For  account  of  the  iron  ore  properties 23,120,539. 17 

For  account  of  the  transportation  properties 49,026,895.81 

For  account  of  the  miscellaneous  properties 4,340,999. 14 

Total  capital  expenditures $255,497,987. 37 

During  the  same  period  there  was  expended  for  extraordinary  re- 
placements and  betterments  the  bum  of .  .  . 92,534,952. 12 


Total $348,032.939.49 


COST  OF  MINING  LAKE  SUPERIOR  IRON          161 

"On  account  of  the  foregoing  expenditures  there  were  issued  and  disposed  of, 
bonds,  mortgages,  and  purchase  obligations  of  subsidiary  companies  to  the 
amount  of  $39,172,863.37,  leaving  a  balance  of  expenditure  of  $308,860,076.12, 
the  funds  for  the  payment  of  which  have  been  provided  from  the  current  earnings 
and  surplus  of  the  organization.  There  have  also  been  paid  off  through  opera- 
tion of  the  bond  sinking  funds,  and  by  discharge  upon  their  maturity  $85,871,- 
019.36  of  bonds,  mortgages,  and  other  capital  obligations  which  were  outstanding 
at  the  time  of  organization  of  the  U.  S.  Steel  Corporation." 

The  statement  leaves  in  doubt  the  exact  meaning  of  the  expenditures 
for  extraordinary  replacements  and  betterments.  It  seems  most  pro- 
bable that  such  expenditures  should  be  charged  off  to  depreciation. 
Making  this  deduction,  we  find  that  the  capital  expenditures  have  been 
$255,498,000  plus  the  cost  of  the  Union  and  Clairton  Steel  Companies 
and  the  Tennessee  Coal,  Iron  &  Railroad  Company.  The  sum  total 
of  which  appears  to  be  in  the  neighborhood  of  $94,000,000.  A  round 
figure  for  all  capital  expenditures  since  the  organization  we  may  take  as 
$350,000,000. 

On  the  assumption  that  these  expenditures  have  increased  the  total 
productive  capacity  of  the  concern  by  two-thirds,  it  is  easy  to  deduce 
the  conclusion  that  the  actual  capital  invested  in  the  enterprises 
at  the  beginning  of  the  organization  was  $525,000,000,  and  that  at 
present  the  total  invested  capital  can  be  calculated  at  $875,000,000,  a 
sum  which  may  be  compared  with  the  total  obligation  of  the  company  in 
preferred  stock  and  bonds  of  the  corporation,  which  amount  in  par  value 
to  $958,315,000. 

The  cash  surplus  of  the  corporation  is  kept  in  round  numbers  at 
$50,000,000,  the  remainder  of  the  surplus,  which  is  stated  to  be  $133,000,- 
000,  having  been  expended  on  the  various  plant  investments.  The 
working  capital  may  be  safely  assumed  to  be  represented  by  the  inven- 
tories which  were,  at  the  end  of  1908,  $143,180,000  plus  the  cash,  making 
a  total  sum  of  $193,000,000.  Adding  this  to  the  foregoing  estimate  of 
fixed  capital  investments,  we  arrive  at  a  total  of  $1,068,000,000  as  the 
actual  capital  employed  in  the  enterprise.  This  sum  plus  the  natural 
enhancement  of  the  value  of  its  properties  is  what  the  stockholders  of 
the  corporation  have  to  show  for  their  money. 

Analyzing  this  matter  a  little  further  we  find  that  the  obligations  in 
the  preferred  stock  and  bonded  indebtedness  amount  to  $958,000,000, 
so  that  the  common  stock  represents  the  equivalent  of  $110,000,000 
invested  capital  plus  all  of  the  enhancement  in  the  value  of  the  property— 
a  state  of  affairs  with  which  the  stockholders  should  be  satisfied. 

The  following  table  shows  the  disposition  made  of  the  earnings  of  the 
company  since  the  beginning : 


n 


162 


THE  COST  OF  MINING 


NET  PROFITS  AND  SURPLUS  OP  UNITED  STATES  STEEL  CORPORATION  AND  SUBSIDIARY 

COMPANIES  AT  CLOSE  OP  EACH  OF  THE  PERIODS  NAMED 
(Includes  only  Surplus  received  or  earned  on  or  subsequent  to  April  1,  1901} 


Period 

Net  profits 
for  period 
available  for 
dividends 

Surplus  at 
close  of 
period  before 
declaration  of 
dividends1 

Dividends  on 
U.  S.  Steel 
Corporation 
stock  for 
respective 
periods 

Written  off 
account  of 
capital  ex- 
penditures, for 
special  funds 
and  for  sundry 
adjustments 
and  accounts 

Balance 
of 
surplus 

Nine  months  ending  Dec. 
31  1901 

$60,600,109.05 
90,306,524.25 

14,891,989.64 
23,987,950.22 
49,684,774.49 
2,230,775.78 

4,606,593.70 
9,082,563.81 
7,617,906.85 
10,143,836.95 

12,178,326.35 
16,875,599.99 
16,977,532.04 
22,653,287.55 

22,371,919.85 
24,536,025.28 
23,543,749.98 
27,767,393.02 

27,031,008.20 
30,843,512.61 
28,758,142.27 
18,614,416.20 

8,854,297.37 
9,042,027.55 
13,998,455.19 
13,739,899.00 

$85,600,109.05 
133,927,464.55 

92,766,586.69 
102,741,592.66 
109,816,596.23 
102,040,612.11 

68,099,358.51 
69,700,504.29 
73,831,323.75 
77,378,489.44 

71,826,602.51 
82,537,094.61 
90,322,263.92 
100,142,623.70 

102,570,244.10 
110,636,708.48 
118,444,038.26 
124,657,647.29 

118,256,429.88 
131,134,185.12 
140,376,218.82 
138,173,190.89 

127,092,583.20 
125,937,322.46 
137,506,368.22 
142,167,611.33 

$41,979,168.75 
56,052,867.50 

14,012,944.25 
12,609,770.92 
10  006  759  90 

$43,620,940.30 
77,874,597.05 

78,753,642.44 
90,131,821.74 
99,809,836  33 

Year  ending  Dec.  31, 

QUARTER  ENDING 

March  31,  1093 

June  30,  1903  

September  30,  1903  
December  31,  1903  

March  31,  1904  

6,482,260.84 

6,304,919.25 
6,304,919.25 
6,304,919.25 
6,304,919.25 

6,304,919.25 
6,304,919.25 
6,304,919.25 
6,304,919.25 

8,846,321.75 
8,846,431.75 
8,846,431.75 
8,846,431.75 

8.846,431.75 
8,846,431.75 
8,846,431.75 
8,846,431.75 

8,846,431.75 
8,846,431.75 
8,846,431.75 
8,846,431.75 

$29,461,668.91 

66,096,682.36 

61,794,439.26 
63,395,585.04 
67,526,404.50 
61,365,445.69 

62,221,683.26 
68,732,175.36 
77,517,344.67 
84,738,340.67 

83,223,812.35 
88,780,176.73 
98,597,606.51 
97.720,714.35 

94,909,998.13 
103,877,753.37 
116,529,787.07 
122,645,243.62 

118,246,151.45 
117,090,890.71 
128,659,936.47 
133,415,214.17 

June  30,  1904  
September  30,  1904  
December  31,  1904  

March  31,  1905  
June  30,  1905  
September  30,  1905  
December  31,  1905  

March  31,  1906  

9,708,124,50 

3,300,000.00 
7,500,000.00 
6,500,000.00 
9,099,253.78 

10,500,000.00 
13,000,000.00 
11,000,000.00 
18,090,501.19 

14,500,000.00 
18,500,000.00 
15,000,000.00 
6,681,515.52 

Cr.  94,034.59 

June  30,  1906  
September  30,  1906  
December  31,  1906 

March  31,  1907..  . 

June  30,  1907  .  . 

September  30,  1908  
December  31,  1907  

March  31,  1908 

June  30,  1908  . 

September  30,  1908  
December  31,  1908  

SUMMARY — APRIL  1,   1901,  TO  DECEMBER  31,  1908 

Capital  surplus  provided  at  date  of  organization $25,000,000. 00 

Aggregate  net  profits  as  above $560,938,617. 19 

Less,  amount  included  therein  representing 
accrued  profits  on  inter-company  ma- 
terials on  hand  in  inventories $10,371,8  3.25 

Net  charges  against  profits  made  at  close 
of  fiscal  years,  not  applicable  to  particu- 
lar quarters 7,119,665. 15 

Reserved  for  fund  to  cover  possible  failure 
to  realize  advanced  mining  royalties. . . .  2,800,000.00 


20,291,468.40 
Balance  of  profits  earned 540,647,148. 79 


$565,647,148.79 

1  Includes  Capital  Surplus  of  $25,000,000  provided  at  date  of  organization,  also  Undivided  Surplus 
of  Subsidiary  Companies  representing  accrued  profits  on  Inter-Company  materials  on  hand  in  in- 
ventories. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  163 

Dividends  paid  on  U.  S.  Steel  Coporation  Stocks,  viz.: 

Preferred,  54  per  cent $218,975,274 . 66 

Common,  15  per  cent 78,765,032 . 50 


297,740,307.16 

Leaving  a  surplus  of $267,906,841 . 63 

Brought  forward $267,906,841 . 63 

Of  the  foregoing  surplus  there  has  been  appropriated  for  payment  of  construction 

and  capital  expenditures  and  special  charges,  per  sixth  annual  report,  page  8 162,827,364. 16 


Balance  of  surplus  December  31,  1908,  exclusive  of  subsidiary  companies' 
inter-company  profits  in  inventories $105,079,477.47 

Undivided  surplus  of  subsidiary  companies  on  December  31,  1908,  repre- 
senting profits  accrued  on  sales  of  materials  to  other  subsidiary  com- 
panies and  on  hand  in  latter's  inventories 28,335,736. 70 


Total $133,415,214.17 

It  seems  legitimate  to  make  the  following  comments  on  this  statement : 

The  actual  profits  were  $540,647,000  derived  from  the  sale  of  ap- 
proximately 67,500,000  tons  of  finished  steel  products  and  about 
12,000,000t"  barrels  of  cement.  Let  us  figure  only  on  the  tonnage  of 
finished  iron  and  steel  products,  and  there  appears  a  profit  of  $8  per 
ton. 

Of  these  earnings  $297,740,000  has  been  paid  in  dividends  or  ap- 
proximately $4.40  per  ton.  The  remaining  $242,000,000  has  been  added 
to  plant  or  used  to  increase  the  cash  surplus,  only  $25,000,000  or  some 
40  cents  a  ton  being  used  for  the  latter  purpose,  the  remainder,  over 
$217,000,000  or  $3.20  per  ton,  being  used  for  the  expansion  of  the  business. 
Under  ordinary  circumstances  there  would  be  in  one's  mind  a  great  doubt 
as  to  whether  the  sum  thus  expended  for  plant  extensions  should  be  held 
as  an  addition  to  capital  or  whether  it  should  be  written  off  to  depre- 
ciation. But  in  this  remarkable  case  there  seems  to  be  no  doubt  what- 
ever that  the  circumstances  justify  the  treatment  of  the  whole  amount 
as  a  true  capital  expenditure.  It  is  not  necessary  to  dwell  on  this  point 
further  than  to  point  out  that  the  expansion  of  the  producing  capacity 
of  the  concern  by  66%  per  cent,  shown  above  is  a  more  than  sufficient 
justification.  We  are  led  then  to  believe  that  the  profits  reported  by  the 
company  are  really  profits,  namely,  $8  per  ton,  and  that  this  is  over 
and  above  all  requirements  for  interest  on  bonds  and  building  up  of 
sinking  funds,  besides  depreciation.  This  means  that  the  sum 
of  nearly  $70,000,000  per  annum  has  been  earned  by  the  preferred  and 
common  stock  of  the  corporation.  The  full  dividends  of  7  per  cent, 
a  year  have  been  paid  on  the  preferred  stock,  absorbing  $219,000,0001 
in  the  seven  and  three-quarters  years. 

The  remainder,  $321,000,000,  has  all  gone  to  the  benefit  of  the  com- 

1  In  1903  the  preferred  stock  was  diminished  by  $150,000,000  by  conversion  into 
an  issue  of  bonds.  The  present  preferred  stock  amounts  to  $360,281,100  on  which  the 
annual  dividend  is  $25,215,672. 


164  THE  COST  OF  MINING 

mon  stock  and  has  been  used  to  pay  dividends  to  the  amount  of 
$78,765,000,  and  the  building  up  of  equities  to  the  amount  of  some 
$242,000,000. 

It  is  probably  true  that  at  the  beginning  the  commonstock  represented 
little  or  nothing  more  than  a  speculative  possibility.  But  the  success 
of  the  company  during  the  last  eight  years  has  created  most  substantial 
values  for  it.  It  must  be  remembered  that  the  great  constructive 
enterprises  of  the  corporation  have  as  yet  yielded  little  return.  That 
is  for  the  future.  If  we  calculate  that  the  probabilities  of  the  future 
contain  nothing  more  than  a  realization  on  the  expansion  already  ac- 
complished, the  earning  powers  of  the  concern  seem  fairly  prodigious. 
If  it  has  now  reached  a  point  where  it  can  pay  out  as  dividends  the  earn- 
ings on  a  product  equal  only  to  the  average  of  the  last  eight  years, 
without  counting  on  any  increased  product,  we  find  that  the  earnings 
available  for  dividends  are  equal  to  $45,000,000  a  year  on  the  common 
stock,  approximately  9  per  cent.  There  are  only  two  grounds  for  doubting 
that  this  will  be  realized,  namely,  that  the  prices  and  costs  of  the  future 
may  not  be  the  same  as  in  the  past,  and  that  the  management  may  de- 
teriorate. How  far  these  elements  may  weaken  the  position  of  the  cor- 
poration only  the  future  can  tell.  But  its  record  to  date,  and  especially 
for  the  past  five  years,  makes  it  a  conservative  statement  that  this 
concern  is  the  greatest  and  promises  to  be  one  of  the  most  profitable 
enterprises  that  the  world  has  ever  seen. 

IRON  ORE  MINES 
Developed  Iron  Ore  Mines  Owned  by  Subsidiary  Companies, 

December  31,  1908 
IN  THE  LAKE  SUPERIOR  ORE  REGION 

Marquette  Range  Marquette  Range  (Con't)  Menominee  Range  (Con't) 

Hartford  Mine.  Winthrop  Mine.1  Hilltop  Mine.1 

Queen  Mine  (%  int.).  Champion  Mine.  Chapin  Mine. 

Section  16  Mine  (%  int.).  Aragon  Mine. 

Section  21  Mine  (%  int.).  Menominee  Range  Cundy  Mine.1 

Hard  Ore  Mine  (%  int.).          Mansfield  Mine.  Iron  Ridge  Mine.1 

Hematite  Mine  (%  int.).          Michigan  Mine.  Pewabic  Mine  (%  int.). 
Moore  Mine.1                             Riverton  Mine. 
Stegmiller  Mine.                        Cuff  Mine.1 

The  foregoing  part  of  this  chapter  is  retained  because,  in  spite  of  the 
fact  that  many  of  its  figures  are  now  out  of  date,  it  throws  into  perspective 
a  portion  of  the  experience  of  one  of  the  most  characteristic  of  American 
industrial  organizations.  The  succeeding  ten  years  show  some  results 
that  are  worth  noting. 

The  investment  of  capital  has  gone  on  undiminished  in  all  depart- 
ments of  the  business.  Since  1908  the  gross  profits  have  been 

1  Inactive  at  present  time. 


COST  OF  MINING  LAKE  SUPERIOR  IRON  165 

$1,108,000,000  after  the  payment  of  bond  interest,  war  taxes,  etc.  Of 
this  amount  $602,925,000  has  been  paid  in  dividends,  that  is,  about  55 
per  cent.  The  remaining  45  per  cent,  has  been  retained  for  investment 
and  is  employed  chiefly  as  additional  working  capital,  in  inventory 
and  cash,  and  in  various  constructive  enterprises. 

The  total  amount  of  finished  steel  products  marketed  in  the  decenniuni 
was  120,000,000  tons.  It  is  worth  observing  that  the  dividends  have 
averaged  just  $5  per  ton,  against  $4.40  per  ton  in  the  preceding  peiiod. 
The  grand  total  production  for  17  years  and  9  months  life  of  this  corpora- 
tion up  to  the  end  of  1918,  was  187,500,000  tons  of  finished  steel  products 
for  sale,  and  the  dividends  $900,665,000  being  $4.80  per  ton. 

The  investment  of  all  this  capital  has  permitted  a  decided  increase 
of  output  but  that  output  has  not  kept  pace  with  that  of  the  other 
steel  and  iron  producers  of  the  country.  Nevertheless  the  increase  has 
been  considerable  rising  from  an  average  of  8,700,000  tons  for  the  first 
ten  years  to  just  12,000,000  for  the  succeeding  ten — 38  per  cent.  The 
largest  output  of  course  was  during  the  last  three  years  of  the  war,  but  the 
effect  of  this  was  hardly  great  enough  to  make  much  difference  in  the 
grand  averages;  for  in  two  years  before  the  war,  1912  and  1913,  the  output 
was  above  the  average  for  the  ten  year  period.  We  are  warranted  in 
supposing  that  had  there  been  no  war  the  regular  course  of  industrial 
expansion  would  have  brought  at  least  a  year  or  two  of  high  figures. 
If  the  rate  of  growth  is  to  be  maintained  we  may  expect  for  the  coming 
decade  an  average  output  of  16,500,000  tons  finished  steel  products  and 
dividends  approximating  $80,000,000  a  year,  which  would  be  7  per  cent, 
on  the  preferred  and  10  per  cent,  on  the  common  stock. 

By  gleaning  the  reports  for  all  these  years  it  is  possible  to  get  some 
additional  figures  which  throw  a  good  deal  of  light  on  the  conduct  of  this 
business.  These  figures  relate  to  the  employment  of  capital  and  of 
labor.  From  the  standpoint  of  the  mining  business  some  of  the  facts 
are  clearer  than  they  were  ten  years  ago. 

The  total  investment  account  reaches  the  immense  sum  of  $1,871,- 
000,000  which  probably  represents  the  first  cost  of  the  properties,  plus 
the  capital  investments  that  have  been  added.  The  latter  amounts  come 
to  $800,000,000  in  actual  cost,  although  the  books  show  only  $710,000- 
000.  The  difference  is  due  to  writing  off  $92,000,000  during  the  war 
period  on  account  of  the  " excessive  cost  of  construction."  From  this 
we  may  conclude  that  the  company  tries  to  place  its  assets  at  a  normal 
replacement  cost. 

The  only  means  available  for  estimating  the  original  cost  of  these 
properties  is  to  assume  that  it  corresponds  to  the  rate  of  the  investments 
made  since  the  purchase.  Those  investments  are  a  shade  over  40  per 
cent,  of  the  total  "investment  account"  as  published,  and  38  per  cent, 
of  the  amount  shown  on  the  books  to  have  been  actually  spent.  From 


166  THE  COST  OF  MINING 

this  we  may  assume  that,  in  round  numbers,  the  first  cost  represents  60 
per  cent,  and  the  additions  40  per  cent,  of  the  present  investment  account, 
Proceeding  in  this  way  we  can  form  an  estimate  of  the  disposition  of  the 
entire  invested  and  working  capital. 

The  manufacturing  properties  include  blast  furnaces,  rolling  mills, 
wire  mills,  tin  plate  mills,  etc.  Since  1901  the  great  new  plant  at  Gary, 
Indiana  and  a  considerable  one  at  Duluth  have  been  built  in  entirely. 
The  Tennessee  Coal  and  Iron  Co.,  and  the  Union  and  Clairton  Steel 
companies  have  been  purchased  outright  but  the  figures  for  improvements 
are  exclusive  of  these  purchases.  These  concerns  however  contribute  to 
the  dizzying  total  of  the  manufacturing  plants.  I  shall  not  try  to  specify 
them  further  than  to  remark  that  there  are  145  works,  124  blast  furnaces, 
38  Bessemer  converters  and  334  open  hearth  furnaces.  The  amount 
expended  on  all  these  plants  has  been  $508,000,000,  from  which  I  conclude 
that  their  original  cost  was  about  $750,000,000  and  their  present  value 
about  $1,250,000,000.  Of  this  amount  I  suppose  the  124  blast  furnaces 
must  represent  pretty  close  to  $250,000,000. 

Similarly  we  find  that  the  coal  and  coke  properties  have  cost  .$92,000- 
000,  for  improvements  and  that  their  present  value  is  estimated  at 
$230,000,000.  That  this  is  not  unreasonable  is  attested  by  the  fact 
that  there  are  included  some  330,000  acres  of  the  best  coal  land  in  the 
country,  with  71  coke  plants  and  31  additional  coal  mining  plants,  with 
22,000  bee  hive  ovens  and  2558  by-product  ovens. 

The  iron  ore  properties  have  been  improved  and  developed  at  a 
capital  cost  of  $48,000,000  indicating  a  total  value  of  $120,000,000. 
This  figure  does  not  seem  unreasonable  for  it  includes  110  mines  in  the 
Lake  Superior  region  and  21  in  the  Southern  fields.  These  properties 
have  shipped  a  maximum  of  33,355,000  tons  of  ore  in  a  season  (1916). 
The  capital  value  is  therefore  only  $3.50  per  annual  ton  at  maximum 
capacity  and  $4.30  for  their  average  production  for  ten  years. 

The  transportation  properties  include  1000  miles  of  main-line  rail- 
road, with  branches,  second  tracks  and  sidings  amounting  to  2400  miles 
or  more;  1421  locomotives,  over  60,000  cars,  and  106  large  steamers  and 
barges  on  the  Great  Lakes  and  the  Ocean,  besides  202  river  barges. 
On  these  properties  no  less  than  $127,000,000  has  been  spent  since 
the  incorporation,  indicating  a  present  value  of  $300,000,000. 

Miscellaneous  properties  include  water  supply  plants  in  the  coke 
region,  natural  gas  and  oil  property  and  forwarding  and  receiving  docks 
for  ore  and  coal.  On  these  some  $19,000,000  has  been  spent  indicating 
a  value  of  about  $45,000,000. 

If  we  group  all  these  figures  we  may  get  a  rough  approximation  of  the 
amount  both  of  capital  and  labor  required  for  the  production  of  pig 
iron.  It  is  of  course  impossible  to  separate  accurately  from  the  informa- 
tion given  in  the  annual  reports,  the  coal,  coke  and  transportation  used 


COST  OF  MINING  LAKE  SUPERIOR  IRON 


167 


only  to  bring  the  metal  to  the  pig-iron  stage,  from  that  required  in  sub- 
sequent manufacture;  but  certain  conclusions  may  be  drawn. 

It  appears  that  the  coke  required  to  make  pig  iron  only  is  about  ton 
for  ton.  From  this  we  conclude  that  nearly  nine-tenths  of  the  coke 
produced  by  the  corporation  is  used  for  that  purpose.  The  steam  coal 
is  not  so  extensively  used  in  making  pig-iron  as  in  later  manufacturing; 
but  some  must  go  into  it.  When  we  recollect  that  out  of  a  grand  total 
average  production  of  28,400,000  tons  of  coal  no  less  than  20,000,000 
tons  is  required  to  make  the  13,500,000  tons  of  coke  used  in  the  blast 
furnaces,  we  may  reasonably  conclude  that  at  least  three  quarters  of  the 
investment  in  coal  and  coke  properties  should  be  apportioned  to  pig  iron. 

All  of  the  iron  ore  investments  belong  to  the  making  of  pig  iron. 

The  transportation  properties  are  chiefly  used  for  the  assembling  of 
raw  materials.  Manufactured  products  no  doubt  are  also  handled,  but 
necessarily  only  to  a  minor  extent;  they  must  be  shipped  from  the  fac- 
tories in  all  directions  and  must  go  mainly  on  the  common  carriers. 
Materials  in  process  of  manufacture  are  of  course  transported  from  plant 
to  plant,  but  in  general  they  probably  go  only  short  distances.  But  if 
it  is  conceded  that  the  pig  iron  is  transported  in  equal  proportions  with 
the  materials  used  in  making  it  we  should  have  the  following  comparison. 

Tonnage  of  ore. . 25,800,000 

Coal 21,300,000 

Limestone 5,000,000 


Transportation  required  for  pig  iron  only. 


Tonnage  of  pig  iron 


52,100,000 

13,250,000 — Required  for  manufacture. 


Total 65,350,000 

Proportion  required  for  pig  iron  only,  80  per*  cent.  We  may  then  charge 
80  per  cent,  of  the  capital  in  the  transportation  system  to  the  making  of 
pig  iron. 

To  cut  the  discussion  short  we  may  tabulate  the  distribution  of 
capital  required  for  making  pig  iron  only  and  that  required  for  subse- 
quent manufacturing  as  follows : 


Pig  iron 

Manufacturing 

Manufacturing  plants  

$1,000  000,000 

Blast  furnaces  .  .  . 

$250,000  000 

Coal  and  coke 

172  500  000 

57  500  000 

Ore  properties  .  .    . 

120,000,000 

Transportation  properties.  .    . 

240  000  000 

60  000  000 

Miscellaneous  

35,000,000 

12,000,000 

Total  

$817  500,000 

$1  149,500,000 

168 


THE  COST  OF  MINING 


But  the  grand  total  of  these  sums  is  $1,967,000,000,  which  has  been 
written  down  to  $1,871,000,000.  If  we  distribute  this  shrinkage  between 
the  two  groups  we  shall  have  for  pig  iron  approximately  $780,000,000, 
for  subsequent  manufacture,  $1,090,000,000. 

These  figures  are  for  the  end  of  1918.  To  get  the  average  capital 
required  for  the  output  of  the  ten-year  period  we  should  go  back  about 
half  way,  i.e.,  charge  to  the  production  of  the  period  only  the  amount 
that  had  been  finished  in  time  to  participate  in  making  the  actual  output 
and  not  that  which  provides  for  an  increased  future  output.  Without 
going  into  details,  we  arrive  by  this  correction  to  the  conclusion  that  the 
actual  investment  required  to  make  13,523,000  tons  a  year  was  about 
$700,000,000,  say  $53  per  annual  ton. 

By  a  similar  process  of  reasoning  we  may  deduce  the  distribution  of 
labor.  We  must  do  some  guessing,  but  I  think  the  amount  of  it  will  not 
be  sufficient  to  cause  much  doubt  as  to  the  proportion  of  things. 

It  appears  that  prior  to  1916  the  cost  of  operating  the  blast  furnaces 
was  about  $1.40  per  ton  of  pig  iron.  This  would  mean  an  annual  ex- 
penditure for  labor,  power,  etc.,  of  about  $19,000,000.  The  labor  alone 
would  be  perhaps  $13,000,000,  and  would  indicate  the  employment  of 
about  16,000  men.  With  this  start  we  may  apportion  the  labor. 


Pig  iron 

Manufacturing 

Total 

Mining  iron  ore  

13,214 

13,214 

Coal  and  coke 

16940 

5  646 

22  586 

Transportation  .  . 

16  700 

4,176 

20,876 

Miscellaneous  

2,000 

978 

2,978 

Blast  furnaces 

16000 

16  000 

Other  labor. 

145,807 

145,807 

64,854 

156,607 

221,461 

This  distribution  indicates  that  the  proportion  of  the  corporation's 
labor  required  for  the  production  of  pig  iron  is  less  than  30  per  cent,  of 
the  total,  while  the  capital  employed  for  the  same  purpose  is  about 
40  per  cent,  of  the  total. 

According  to  these  figures  each  employe  produces  about  208  tons  of 
pig  iron  a  year.  Under  the  pre-war  conditions,  say  up  to  the  end  of  1915, 
the  average  cost  of  this  labor  was  less  than  $900,  rising  from  $780  per  year 
in  1909  to  $925  in  1915.  The  cost  therefore  of  mining,  preparing  and 
assembling  raw  materials  and  operating  the  blast  furnaces  was  roughly 
as  follows : 

There  are  certain  other  charges,  the  amount  of  which  is  not  so  clearly 
indicated.  The  Corporation's  facilities  for  assembling  raw  materials, 


COST  OF  MINING  LAKE  SUPERIOR  IRON  169 

Cost  of  pig  iron 

Labor,  $850,  producing  208  tons $4 . 20 

Other  operating  expenses  75  per  cent,  additional 3. 15 

Thirty  per  cent,  of  Corporation's  administrative  expense 0 . 45 

Forty  per  cent,  of  taxes 0 . 40 


Total  direct  operating  cost $8.10 

though  extensive,  are  not  all-embracing.  A  large  portion  of  the  pig 
iron  is  made  in  the  Chicago  district  and  coke  must  be  transported  thither 
chiefly  from  the  Pittsburgh  region.  But  the  principal  item  is  the  de- 
preciation of  $700,000,000  capital  which  is  taken  care  of  under  various 
headings  called  "ordinary  repairs  and  maintenance,"  " extraordinary 
repairs"  and  " depreciation."  How  much  of  these  expenses  is  covered 
by  the  Corporation's  working  force  and  how  much  is  done  by  outsiders 
by  contract  is  again  not  clear.  If  the  depreciation  averages  6  per  cent, 
of  the  cost  of  the  properties  the  amount  will  be  $42,000,000 — about 
$3.20  per  ton. 

It  seems  safe  to  say  that  the  sum  total  of  all  such  expenditures  must 
fall  under  $4.00  per  ton,  and  that  the  complete  cost  of  making  pig  iron 
must  have  been  less  than  $12.00. 

It  will  be  observed  that  this  grouping  of  figures  brings  us  to  about 
the  same  conclusion  arrived  at  in  1909. 

In  the  general  rise  of  prices  in  late  years  the  cost  per  unit  of  labor  and 
supplies  has  remained  about  the  same,  but  in  dollars  and  cents  it  has 
risen  at  times  quite  to  double  the  figures  given  above.  Some  details 
may  be  of  interest. 

In  the  coal  and  coke  properties  during  the  year  1918,  28,378  men 
mined,  31,748,135  tons  of  coal,  from  which  they  made  17,757,636  tons 
of  coke,  using  for  that  purpose  25,393,155  tons  of  the  coal.  Presumably 
some  5000  to  6000  of  the  men  were  employed  in  burning  the  coke.  There 
would  be  left,  say,  23,000  men  to  mine  the  coal.  Each  man  would  pro- 
duce some  1380  tons  per  year,  over  4J^  tons  per  working  day.  Under 
pre-war  conditions  such  an  output  would  have  meant  a  total  cost  of  less 
than  90  cents  per  ton;  but  in  1918,  doubtless,  at  least  $2.00. 

In  the  iron  ore  properties,  28,332,959  tons  was  produced  by  12,619 
men;  no  less  than  2246  tons  per  man,  7J^  tons  per  man  per  working  day. 
This  is  an  extraordinary  output  which  indicates  that  a  large  part  was 
produced  by  steam  shovels;  also  probably  that  for  that  season  some  of 
the  usual  development  work  was  postponed  in  order  to  economize  labor 
for  war  demands.  For  the  ten  year  period  the  average  output  per  man  in 
the  iron  mines  was  1950  tons  per  year,  about  6^  tons  per  working  day. 
Either  of  these  figures  indicates  remarkably  low  costs  and,  incidentally, 
the  great  superiority  of  the  mines.  It  will  be  remembered  that  during 
the  years  1906-1910,  the  total  cost  in  the  mines  of  Michigan  was  $1.65 
per  ton  with  an  output  of  700  tons  per  man  per  year.  If  the  same  pro  por 


170  THE  COST  OF  MINING 

tion  holds  good  with  the  Steel  Corporation's  mines,  its  cost  should  have 
been  only  60  cents  a  ton. 

The  great  output  per  man  is  explained  almost  wholly  by  the  ease 
with  which  ore  is  produced  from  the  bonanza  mines  of  the  Mesabi  Range. 
The  following  figures  will  be  an  illustration.  In  1916  the  entire  Corpora- 
tion mined  33,355,169  tons  of  iron  ore  with  only  12,624  men.  Of  this, 
13,000,000  tons  came  from  the  Hibbing  district  on  the  Mesabi  Range  and 
was  produced  by  1800  men — more  than  7000  tons  per  man  per  year,  ten 
times  the  yield  obtained  at  the  underground  mines.  In  the  Virginia 
district,  of  the  Mesabi,  where  a  number  of  the  other  steam-shovel  mines 
of  the  company  are  found,  1400  men  produced  4,250,000  tons.  On  the 
Western  Mesabi  similar  productions  are  made.  We  may  believe  that  in 
1916,  24,000,000  tons  was  mined  on  the  Mesabi  by  not  over  4400  men — a 
yield  of  some  18  tons  per  man  per  day  for  all  the  properties  on  it.  De- 
ducting this  production  we  find  that  8000  men  produced  about  9,000,000 
tons  from  other  properties,  1125  tons  per  man  per  year. 

This  last  figure  again  shows  how  the  Steel  Corporation  has  obtained 
the  best  mines  of  the  Lake  Superior  region.  Its  output  from  the  under- 
ground mines  seems  to  be  at  least  50  per  cent,  better  than  the  average 
obtained  by  its  competitors. 


CHAPTER  XI 

OCCURRENCE,  PRODUCTION  AND  PROSPECTS  OF  COPPER 

ECONOMIC  CLASSIFICATION  OP  COPPER  MINES — COST  OP  PRODUCING  COPPER  PROM 

DISSEMINATED  ORES FROM  QUARTZ-PYRITE  ORES FROM  SMELTING  ORES  THE 

COPPER  BUSINESS  IN  1909 THE  OUTLOOK  IN  1919 COPPER  MINERALS WORLD'S 

PRODUCTION — GROWTH  AND  DISTRIBUTION  OF  PRODUCTION  IN  THE  UNITED  STATES 
— PRODUCTION  OF  DISTRICTS — PLANTS  REQUIRED — CONCENTRATION — SMELTING 
— REFINING — DIVIDEND  s. 

General  Considerations. — We  may  divide  copper  mines  into  three 
classes,  each  presenting  a  different  economical  problem:  (I)  Dissemi- 
nated ores  in  which  concentration  is  the  all-important  thing,  smelting 
being  applied  only  to  a  fraction  of  the  material  mined.  (II)  Quartz 
pyrite  ores  in  fissure  veins  in  which  the  ratio  of  concentration  is  tow,  the 
proportion  smelted  considerable,  making  the  costs  usually  high.  (Ill) 
Ores  that  cannot  be  concentrated  and  must  be  smelted  in  bulk. 

I.  DISSEMINATED  ORES 

The  first  class  contains  the  Lake  Superior  copper  ores  in  which  native 
copper  is  disseminated,  either  in  porphyry  or  in  conglomerates  derived 
from  porphyries,  in  the  proportion  of  from  1  to  4  per  cent.  These  ores 
are  concentrated  in  the  mills  (with  20  per  cent,  loss  in  milling)  to  from  1  to 
4  per  cent,  of  their  original  volume.  This  is  the  proportion  smelted. 

The  disseminated  ores  are  discussed  in  following  chapters. 

The  salient  facts  regarding  the  cost1  of  mining  disseminated  ores  may 
be  expressed  in  the  accompanying  table: 

COST  OP  MINING  DISSEMINATED  ORES 

Low  High 

Mining!  OP61^ $0-50 

K  \   Underground 1.25  $2.50 

Concentrating 0 . 40  1 . 00 

Smelting,  refining,  and  marketing 0.15  1 . 30 

Open  Pit $1.05  $4.80 

Underground 1 . 80 

At  the  average  price  of  15  cents  for  copper,  these  figures  mean  that 
under  the  most  favorable  conditions  a  Lake  Superior  ore,  if  it  could  be 
mined  from  an  open  pit,  might  meet  expenses  with  a  yield  of  only  7  Ib. 
per  ton.  If  mined  underground  about  12  Ib.  is  the  minimum;  while 
under  the  most  unfavorable  conditions  a  yield  of  32  Ib.  may  be  required. 

1  Under  the  present  scale  of  prices  these  cost  figures  are  too  low  but  the  pro- 
portions are  as  true  as  ever. 

171 


172  THE  COST  OF  MINING 

Cost  of  Producing  Copper  From  Disseminated  Ores; — The  average 
cost  of  producing  the  entire  output  of  copper  is  hard  to  determine, 
because  a  respectable  fraction  is  sold  by  obscure  mines  which  may  not 
always  be  profitable,  and  whose  records  are  not  to  be  had.  I  have 
taken  the  ground  that  the  price  must  be  controlled  by  the  leading  and 
profitable  producers  which  sell  the  bulk  of  the  output  of  each  district. 
In  order  to  form  some  idea  of  the  cost  to  such  leaders,  I  have  compiled 
the  following  information,  the  justness  of  which  will  be  evident  to  any 
reader. 

The  Calumet  &  Hecla  Mining  Company  had  produced  up  to  June, 
1908,  approximately  2,040,000,000  Ib.  of  copper,  on  which  its  earnings 
were  approximately  $115,000,000  net.  This  mine  had  built  up  its 
enormous  plant  almost  entirely  out  of  earnings,  so  that  for  its  forty 
years  of  activity  its  real  and  complete  cost  of  production  must  equal 
the  selling  value  of  its  output,  less  the  profits.  The  actual  price  received 
for  Lake  Copper  in  the  last  forty  years  has  been  almost  exactly  15.3 
cents  per  pound.  Now  the  profit  of  $115,000,000  from  2,040,000,000  Ib. 
is  equal  to  5.63  cents  per  pound.  Subtract  this  from  15.30  cents,  and 
we  get  9.67  cents  as  the  cost  of  the  entire  product. 

Similarly,  the  Quincy  mine  has  produced  413,000,000  Ib.  at  a  total 
cost  of  $45,500,000,  equal  to  11  cents  a  pound.  The  Copper  Range 
mines,  Baltic,  Trimountain,  and  Champion,  had  produced,  up  to  1907, 
209,000,000  Ib.  for  $27,316,000,  equal  to  13.07  cents  a  pound.  The 
Wolverine  had  produced,  up  to  1907,  87,000,000  Ib.  for  $7,783,000, 
equal  to  8.9  cents  a  pound. 

This  entire  group  has  produced  2,740,000,000  Ib.  for  $275,364,000, 
equal  to  a  trifle  over  10  cents  a  pound. 

Looking  to  the  future  it  is  plain  that  the  cost  of  copper  from  the  Lake 
Superior  district  and  from  these  same  mines  will  exceed  this  figure.  In 
some  former  article  published  in  the  Engineering  and  Mining  Journal 
on  this  subject,  I  stated  that  the  copper  from  disseminated,  concentrating 
deposits  could  be  produced  for  9  cents.  I  was  misled  in  making  this 
statement  by  taking  too  narrow  a  view  of  the  situation.  The  Calumet 
&  Hecla  in  its  ten  most  prosperous  years,  from  1897  to  1906,  produced 
855,000,000  Ib.  at  about  8*4  cents  a  pound.  This  figure,  in  the  light  of 
fuller  consideration,  appears  to  be  quite  1.4  cents  below  the  average  for 
the  life  of  the  mine  to  date;  and  still  more  below  the  prospective  costs. 

The  situation  is  as  follows:  During  the  ten  fat  years  mentioned  above, 
the  mine  was  in  bonanza.  The  ore  yielded  quite  50  Ib.  per  ton.  Nearly 
all  the  production  was  from  the  great  conglomerate  ore  shoot,  which  has 
been  quite  exceptional  among  Lake  Superior  deposits  in  richness.  But, 
according  to  testimony  given  by  Mr.  Alexander  Agassiz,  the  president, 
and  by  Mr.  James  McNaughton,  the  manager  of  the  Calumet  &  Hecla, 
in  the  Osceola  lawsuit,  it  appears  that  by  1908  the  average  yield  of  the 


PRODUCTION  AND  PROSPECTS  OF  COPPER 


173 


conglomerate  had  fallen  to  40  Ib.  per  ton,  and  the  yield  is  steadily  di- 
minishing. The  experience  of  the  Tamarack  was  that  the  conglomerate 
just  below  the  Calumet  &  Hecla  line  yielded  only  20  Ib.  and  was  un- 
profitable. It  appears  probable,  therefore,  that  the  remaining  ground 
on  the  conglomerate  is  likely  to  yield  not  more  than  a  mean  between 
40  Ib.  and  20  Ib.,  or  30  Ib.  per  ton.  The  testimony  is  that  between  20 
and  24  million  tons  of  conglomerate  will  still  be  produced.  This  means 
only  600  to  700  million  pounds  of  copper.  It  does  not  seem  probable 
that  this  will  cost  less  than  11  cents  on  the  average.  This  is  about 
what  it  costs  on  the  Osceola  lode  where  worked  by  the  same  company. 

When  we  remember  that  it  has  cost  the  Quincy  11  cents,  that  it  is 
costing  the  Osceola  Consolidated  12  cents,  the  Mohawk  over  11  cents, 
it  does  not  seem  likely  that  there  is  any  prospect  of  any  great  output  below 
that  figure.  The  Wolverine  is  indeed  producing  for  less  than  8  cents, 
but  its  output  is  so  small  as  to  have  little  effect.  The  Copper  Range  mines 
can  hardly  expect  to  fall  under  11  cents  for  complete  costs.  Their 
product  thus  far  has  cost  over  13  cents,  but  this  includes  the  whole  cost  of 
equipment.  A  deduction  of  2  cents  a  pound  for  the  209,000,000  Ib. 
produced  by  the  Copper  Range  mines  makes  over  $4,000,000,  which 
seems  to  be  all  that  should  be  charged  to  the  future  for  plant.  It  seems, 
therefore,  that  if  the  Copper  Range  can  cover  all  expenses  for  11  cents, 
it  will  do  very  well. 

When  we  consider  that  these  figures  are  for  the  best  mines  in  the  dis- 
trict, and  that  the  factor  of  increasing  depth  increases  both  the  cost  and 
the  danger  of  impoverishment,  we  may  conclude,  I  think  with  safety, 
that  there  will  be  no  real  profits  from  the  Lake  mines  under  11  cents,  and 
very  little  under  12  cents.  Among  the  Lake  mines  nothing  had  occurred 
up  to  the  end  of  1915  to  disturb  these  conclusions. 

Among  the  disseminated  ores  of  the  west  it  will  be  shown  I  think 
that  during  the  same  period  experience  had  shown  that  costs  were  about 
as  follows: 


Annual  out- 
put, pounds 

Cost  per 
pound,  cents 

Miami 

50  000  000 

10 

Chino  

75,000  000 

9 

Rav 

80  000  000 

11 

Moctezuma  

30,000,000 

9 

Detroit 

20  000  000 

11 

Nevada  

70,000,000 

9 

Utah  

200  000  000 

11 

Inspiration  

100,000,000 

9 

In  each  case  the  cost  is  such  that  I  believe  the  remainder  could  safely 
be  counted  on  for  dividends,  or  at  least  for  liquid  assets.     The  figures 


174  THE  COST  OF  MINING 

strike  so  near  to  10  cents  a  pound  that  it  is  hardly  worth  while  computing 
an  average.  In  fact  it  will  be  shown  that  the  current  costs  in  the  Lake 
Superior  district  were  exactly  the  same — 10  cents. 

In  each  case  an  allowance  of  3  cents  is  probably  necessary  to  cover 
the  amortization  of  equipment  before  a  profitable  selling  price  is  arrived 
at. 

II.  QUARTZ-PYRITES  WITH  Low  CONCENTRATION 

Of  quartz-pyrite  ores  I  have  given  the  conspicuous  examples  of  Butte 
and  of  the  Wallaroo  and  Moonta.  There  is  substantial  agreement  on 
the  following  points: 

(1)  A  high  mining  cost  owing  to,  a,  high  development  cost  due  to 
searching  for  ore    shoots   through  much  barren  vein  material;  6,  con- 
siderable selection  of   ore  in  the  process  of  mining;  c,  soft  ground  re- 
quiring elaborate  timbering  and  filling. 

(2)  A  high  concentrating  cost  due  in  part  to  the  use  of  hand  sorting, 
but  particularly  to  the  careful  milling  methods  required  to  prevent 
undue  losses. 

(3)  Smelting  costs  are  high  because,  first,  a  low  degree  of  concentra- 
tion gives  a  large  proportion  to  smelt  (from  25  to  50  per  cent.) ;  second, 
because  the  siliceous  and  aluminous  character  of  the  gangue  renders 
smelting  rather  difficult;  third,  because  the  ore  as  mined  is  necessarily 
of  fairly  high  grade. 

The  external  conditions  in  Butte  are  somewhat  less  favorable  than 
at  the  Wallaroo  and  Moonta,  but  in  neither  case  are  the  high  cost  due 
to  them.  I  believe  that  high  costs  are  inherent  to  quartz-pyrite  ores  in 
fissure  veins. 

Australia  Montana 

Mining $4.68  $3.78 

Milling 1.00 

Smelting,  refining,  and  marketing 2 . 37  4 . 62 

General  expenses 0 . 58 


$8.63  $8.40 

Applying  to  these  costs  the  average  price  of  15  cents  per  pound 
copper,  it  is  evident  that  such  ores  must  yeild  about  60  Ib.  copper  or 
its  equivalent  in  order  to  pay  expenses.  With  the  impoverishment  of  the 
ores  with  increasing  depth,  costs  have  increased,  until  in  1908  the  average 
Butte  copper  must  cost  more  than  11  cents  and  perhaps  12  cents.  At  the 
Wallaroo  and  Moonta  copper  has  averaged  in  cost  almost  exactly  10 
cents,  and  lately  as  high  as  15  cents.  The  last  figure,  however,  was  an 
incident  of  the  boom  of  1906,  and  must  be  considered  abnormal. 

Other  mines  of  this  class  are  the  Old  Dominion  and  others  on  the 
great  fault  fissure  of  Globe,  Arizona,  and  in  part,  at  least,  those  of  Can- 


PRODUCTION  AND  PROSPECTS  OF  COPPER  175 

anea,  Mexico.  Whatever  geological  grouping  may  be  appropriate,  the 
economic  results  are  similar  to  the  illustrations  given,  and  bear  out 
emphatically  the  generalization  that  cupriferous  pyrites  with  a  highly 
siliceous  and  aluminous  gangue,  occurring  in  shoots  in  fissure  veins,  are 
essentially  high-cost  ores  at  every  stage  of  the  process. 

Cost  of  Producing  Copper  at  Butte. — Let  us  examine  critically  the 
record  of  the  Anaconda  Copper  Mining  Company  to  get  some  light  on  the 
past  and  future  cost  of  metal  at  Butte.  At  the  beginning  it  is  well  to 
explain  that  the  record  is  only  a  broken  one,  there  being  no  reports 
showing  the  exact  condition  of  the  company  for  a  period  of  seven  years, 
from  1898  to  1905.  During  this  dark  age  there  were  indeed  some  scraps 
of  information  given  out,  but  the  output,  even,  has  not  been  stated  with 
authority.  We  have,  however,  enough  information  to  enable  one  to 
make  some  fairly  accurate  deductions  as  to  the  past  and  future  cost  of 
production. 

The  present  company  was  reorganized  and  began  business  July  1, 
1895.  It  had  at  that  time  little  or  no  surplus  in  its  treasury.  Up  to 
April,  1908,  it  had  paid  $39,500,000  in  dividends,  and  had  accumulated 
a  surplus  of  $6,261,000.  It  seems  fair  to  conclude  that  in  12^  years 
the  earnings  were  $45,500,000. 

This  had  been  obtained  from  an  output  which,  as  just  mentioned,  is 
not  stated  with  authority  but  is  approximately  1,228,000,000  Ib.  copper, 
45,365,000  oz.  silver,  and  196,000  oz.  gold. 

The  average  price  of  metals  for  the  period  was  15  cents  for  copper, 
57  cents  for  silver,  and  $20  for  gold.  It  is  not  strictly  accurate  to  apply 
these  prices  to  the  entire  output,  but  as  the  output  has  been  fairly  uni- 
form for  the  period  there  is  no  likelihood  of  inaccuracy  sufficient  to  throw 
our  calculation  far  astray. 

Let  us  now  convert  the  silver  and  gold  into  their  equivalent  in  copper 
at  15  cents  a  pound.  We  find  that 

45,365,000  ounces  silver  at  57  cents  equals 172,387,000  Ib. 

196,000  ounces  gold  at  $20  equals 25,968,000  Ib. 

Add  the  copper  metal 1,228,000,000  Ib. 

We  get  the  total  copper  equivalent 1,425,455,000  Ib. 

By  dividing  the  profit  of  $45,500,000  by  1,425,000,000  we  get  the 
average  profit  per  pound,  which  is  3.19  cents.  Subtract  this  from  the 
average  price  of  15  cents,  and  we  have  the  cost,  which  equals  11.81  cents 
per  pound.  Of  course  if  the  value  of  gold  and  silver  were  deducted  from 
the  cost  and  the  remaining  sum  only  charged  against  the  copper,  the 
latter  would  be  substantially  cheaper,  but  that  does  not  seem  logical. 

Let  us  now  leave  the  sphere  of  approximations  and  examine  those 
parts  of  the  record  where  exact  figures  are  given.  In  the  two  years 
ending  June  30,  1897,  we  find  that  the  total  output  was  as  follows: 


176  THE  COST  OF  MINING 

Tons  dry  ore 2,681,623 

Pounds  refined  copper 239,400,895  $25,041,240 

Ounces  silver 11,249,792  7,387,965 

Ounces  gold 38,680  798,000 

$33,227,205 

The  copper  equivalent  is  317,660,000  lb.,  this  being  equal  to  118.5  Ib. 
per  dry  ton. 

The  total  expenses  for  the  period  were  $24,855,214.29  and  the  cost 
per  pound  for  operating  was  therefore  7.825  cents.  To  this  may  be  added 
a  total  increase  of  capital  accounts  of  $967,641.70.  If  we  write  this  all 
off  to  operating  the  cost  is  increased  by  0.304  cents  and  the  total  becomes 
8.129  cents  per  pound. 

The  total  cost  per  ton  was  $9.23. 

After  making  the  reports  of  which  the  above  is  a  summary,  the  com- 
pany issued  no  reports  till  1905.  We  have  satisfactory  reports  for  the 
years  1905,1906,  and  1907.  This  period  represents  the  progress  of  the 
company  for  an  average  of  nine  years.  For  the  three  final  years  the 
record  was 

Tons  produced 4,075,725 

Copper  metal,  lb 253,363,226 

Silver,  oz 8,098,139 

Gold,  oz 43,420 

Equivalent  in  copper 286,136,000 

Copper  equilvanet  per  ton,  lb 70. 2 

Total  receipts $50,089,139 

Dividends  paid 16,650,000 

Net  diminution  of  surplus 769,000 

Actual  profits 15,881,000 

Net  value  per  lb.  copper,  cents 17. 514 

Net  profit  per  lb.  copper,  cents 5 . 553 

Net  cost  per  lb.  copper,  cents 11 . 961 

Total  cost  per  ton $8 . 394 

The  meaning  of  these  figures  is  so  obvious  as  scarcely  to  require 
comment.  We  find  the  mines  producing  practically  the  same  tonnage 
as  nine  years  before.  The  cost  per  ton  has  diminished  $1.24.  The 
yield  of  ore  has  diminished  from  118.5  lb.  to  70.2  lb.  per  ton,  in  spite  of 
the  fact  that  the  later  production  has  been  helped  out  a  little  by  the 
re-working  of  slags  from  the  earlier  period.  The  diminution  in  the 
grade  of  the  ore  has  far  out-weighed  the  diminution  of  cost  per  ton,  so 
that  the  cost  of  copper  has  risen  from  8.129  cents  to  11.961  cents,  a  net 
increase  of  3.832  cents  per  pound.  It  is  fair  to  remark  that  the  costs 
in  the  latter  period  were  adversely  affected  by  the  shortening  of  hours  of 
labor,  increased  wages,  and  the  general  inflation  of  prices  of  a  boom 
period;  but  it  must  be  noted  that  these  adverse  conditions  did  not  become 


PRODUCTION  AND  PROSPECTS  OF  COPPER         177 

acute  until  the  middle  of  1906,  and  in  any  event  cannot  go  far  in  accounting 
for  the  great  cost  increase. 

I  am  not  fully  qualified  to  express  an  opinion  as  to  how  far  the 
experience  of  the  Anaconda  represents  that  of  other  Butte  mines,  but 
all  indications  are  that  it  represents  them  pretty  accurately.  We  find 
that  at  the  earlier  period  the  Anaconda  was  producing  better  ores  than 
any  other  mines  have  recently  produced.  Some  rich  ore  has  been  found 
in  the  lower  levels,  below  2000  ft.  in  depth,  but  not  enough  to  arrest  the 
decline  in  metal  contents  for  the  total  output.  There  is,  of  course,  no 
reason  to  doubt  that  by  careful  selection  of  ores  the  decline  may  be 
temporarily  overcome,  but  this  can  only  be  by  a  proportionately  rapid 
depletion  of  reserves. 

It  seems  perfectly  certain  that  the  selling  cost  of  Butte  copper  in  1908 
was  fully  12  cents  a  pound  and  was  constantly  rising.  The  rise  is  not  likely 
to  be  stopped  by  anything  short  of  a  diminution  of  output,  which  would 
be  caused  by  the  extensive  selection  of  ores  in  order  to  bring  them  up  to  a 
higher  grade.  A  good  deal  can  undoubtedly  be  done  to  hold  costs  down. 
Whenever  it  is  imperative  wages  can  be  cut.  A  diminished  output  at 
profitable  cost  is  better  than  a  large  output  without  profit.  The  Anaconda 
mines  are  undoubtedly  developed  and  worked  somewhat  in  advance  of  the 
average  of  the  district,  because  they  are  the  oldest.  How  far  in  advance 
they  are  cannot  be  stated,  but  the  logic  of  events  to  date  is  that  in  ten 
years  more,  if  tonnage  is  maintained,  this  property  will  be  no  longer 
profitable. 

III.  WHEN  ALL  ORE  MUST  BE  SMELTED 

I  have  given  as  examples  of  the  third  class  of  copper  mines;  i.e., 
that  in  which  all  the  ore  must  be  smelted,  Bisbee.  Arizona,  Tennessee 
Copper,  Utah  Consolidated,  Granby  Consolidated,  and  Mount  Lyell. 
To  this  list  might  be  added  the  Rio  Tinto  pyrite  mines  of  Spain  and 
Portugal,  the  mines  of  Shasta  County,  California,  United  Verde  in  Arizona, 
Cerro  de  Pasco  in  Peru,  and  others  of  less  importance. 

Economically  we  may  make  the  following  distinctions  in  this  class : 

(1)  Cupriferous   pyrites   in   an    advanced   state    of   alteration  and 
reconcentration,  so  that  only  a  small  part  of  the  original  mass  can  be 
mined.     In  this  case  mining  costs  as  well  as  smelting  costs  are  inevitably 
high.     Bisbee,  Arizona,  is  a  good  example. 

(2)  Cupriferous  pyrites  in  their  original  state  or  moderately  enriched. 
In  this  case  there  is  usually  presented  a  large  mass  of  homogeneous  ore 
easily  mined  and  easily  treated.     Tennessee  Copper,  Utah  Consolidated, 
and  Mount  Lyell  are  examples.     At  these  properties  the  cost  per  ton  is 
from  $4.20  to  $6. 

(3)  Disseminated,  self-fluxing  ores  not  very  pyritic.     Granby  Con- 
solidated is  an  example. 

12 


178  THE  COST  OF  MINING 

Speaking  generally,  it  must  be  admitted  that  mines  of  class  III  produce 
a  goodly  proportion  of  the  world's  copper.  The  list  of  big  producers 
includes  the  Rio  Tinto,  the  Copper  Queen,  Calumet  &  Arizona,  United 
Verde,  and  many  other  mines  not  so  big,  but  very  profitable.  Rio 
Tinto  seems  to  produce  the  cheapest  copper  in  the  world,  but  I  believe 
this  is  due  to  the  fact  that  the  sulphur  is  also  utilized  to  an  important 
extent.  Leaving  out  this  case,  in  which  copper  costs  only  5  cents  per 
pound,  it  does  not  seem  probable  that  much  copper  from  these  ores  is 
produced  at  less  than  10  cents  per  pound. 

The  approximate  cost  of  producing  from  some  of  the  larger  districts 
which  produce  this  kind  of  ore  is 

Pounds  Dividends  Cost,  cents 

Bisbee 2,500,000,000     $140,000,000  8 

Jerome 1,000,000,000         50,000,000  9 

These  two  districts  are  so  far  the  most  prominent  of  their  class  that 
it  is  scarcely  worth  while  to  tabulate  the  others.  Undoubtedly  these 
mines  are  the  source  of  the  cheapest  copper  to  be  had  in  this  country. 

REMARKS  IN  1909 

It  is  very  well  worth  remarking  that  where  the  original  pyrite  masses 
are  highly  altered  and  the  payable  ores  concentrated  into  small  portions 
of  the  original  orebody,  rich  ores  have  often  been  developed  out  of 
material  which  was  originally  too  low  grade  to  pay.  This  is  the  case  of 
Bisbee,  Arizona,  and  in  Shasta  County,  California,  and  probably  at  Cerro 
de  Pasco.  Such  bonanza  orebodies  are  sure  to  be  variable  in  their  output 
and  may  come  to  a  sudden  end.  They  are  exasperating  to  the  mining 
engineer  who  tries  to  calculate  their  possibilities,  and  dangerous  to  the 
investor.  It  is  seldom  possible  to  put  much  ore  in  sight,  or  to  count 
with  assurance  on  a  long  life  for  the  property.  Nevertheless  they  are 
often  exceedingly  profitable.  There  is  some  reason  to  modify  this.  See 
chapter  on  Bisbee. 

Where  certain  portions  of  the  orebodies  are  enriched,  but  the 
original  masses  are  still  payable,  the  mines  may  exhibit  painful  varia- 
tions in  costs  and  profits,  but  still  remain  prospectively  valuable  for  a 
long  time  ahead.  Such  cases  are  the  Utah  Consolidated,  which  has  had 
a  bad  year,  Mount  Lyell,  and  probably  the  United  Verde. 

Where  the  pyrite  masses  are  in  their  original  condition  they  are  apt 
to  be  uniform  and  reliable  producers.  Undoubtedly  the  Rio  Tinto  mine 
in  Spain  has  a  longer  assured  life  and  more  stable  operating  conditions  than 
any  other  copper  mine  in  the  world.  The  Tennessee  Copper  property 
is  apparently  the  only  mine  of  this  class  in  America,  but  probably  others 
will  be  developed. 


PRODUCTION  AND  PROSPECTS  OF  COPPER  179 

The  Price  of  Copper— Estimate  in  1909.— I  feel  very  confident  that 
the  analysis  of  costs  demonstrates  as  valid  the  following  conclusions: 

1.  No  copper  can  be  produced  in  North  America    under  present 
economic  conditions  at  a  profit  for  less  than  10  cents  a  pound. 

2.  At  11  cents  a  pound  only  half  the  present  output  can  be  produced. 

3.  At  12  cents  many  of  the  largest  producers  would  only  be  getting  a 
new  dollar  for  an  old  one. 

4.  At  15  cents  the  business  as  a  whole  is  prosperous  and  profitable 
only  to  an  entirely  legitimate  degree. 

5.  As  long  as  the  demand  increases  as  it  has  increased  steadily  for 
the  past  quarter  century,  it  is  safe  to  count  for  the  next  ten  years  on  an 
average  price  of  15J^  cents,  which  has  been  the  approximate  average 
for  the  last  ten  years. 

Remarks  on  the  Outlook  in  1919. — The  above  conclusions  were  fairly 
but  perhaps  not  wholly  borne  out  up  to  the  end  of  1915. 

Since  that  time  the  operating  factors  have  gone  up  in  price  about 
70  per  cent.  If  15  cents  was  a  normal  price  before  the  war  25.5  cents 
should  be  the  price  now.  It  stands  at  about  18  cents.  This  means  a 
comparative  depression  in  the  market.  I  believe  however  that  if 
industry  throughout  the  world  were  as  unhampered  and  prosperous  as 
it  was  before  the  war  the  price  actually  would  under  present  cost  factors 
average  25  or  26  cents.  But  we  may  have  to  wait  a  long  time  for  that. 
The  great  producing  power  of  the  Americans  can  be  absorbed  only  by 
a  brisk  demand  from  all  sources.  Europe  can  buy  only  what  she  can 
sell.  With  her  working  capital  and  raw  materials  depleted,  her  labor 
supply  decimated,  her  morale  dissipated,  it  can  scarcely  be  anything  but 
a  slow  process  to  regain  her  economic  vigor.  Europe  has  always  taken 
about  half,  or  more  than  half,  of  American  copper.  (See  chapter  on 
Gold,  Wars  and  Prices.) 

While  it  is  no  part  of  the  plan  of  this  volume  to  discuss  in  detail  the 
geological  or  mineralogical  occurrence  of  ores,  convenience  seems  to 
demand  for  the  reader  some  general  statement  that  will  show  where 
copper  comes  from  and  how  it  is  obtained.  Some  reference  to  geological 

Per  cent, 
copper 

Cupriferous  pyrite 0 .  5  to  4 

Richer  copper  sulphides — Chalcopyrite 34 . 4 

Bornite 55 . 5 

Chalcocite 79 . 7 

Oxides  and   carbonates — Red  oxide 88 . 8 

Black  oxide 79.8 

Azurite 55 . 2 

Malachite 57 . 4 

Silicate— Chrysacolla  36 . 1 

Native  copper 100 


180 


THE  COST  OF  MINING 


conditions  will  be  found  in  following  chapters  illustrating  the  economic 
problems  encountered  at  the  various  mines;  so  that  no  further  descrip- 
tion will  be  attempted  here.  The  entire  output  of  the  mines  to  be  dis- 
cussed here  is  derived  from  the  minerals  listed  above. 

These  various  ores  are  apt  to  be  found  derived  from  an  original 
mineralization  of  cupriferous  pyrite  which  is  simply  iron  sulphide  con- 
taining a  small  proportion  of  copper.  The  effects  of  the  circulation  of 
surface  waters  on  such  ores  has  resulted  in  an  extensive  and  often  pro- 
found rearrangement  of  the  minerals.  In  general  terms  this  is  the  origin 
of  most  commercially  valuable  copper  deposits.  There  are,  however, 
some  very  important  exceptions.  The  native  copper  ores  of  Lake 
Superior  have  not  been  proved  to  have  any  connection  with  any  original 
sulphide.  The  new  porphyry  deposits  of  Utah,  Nevada,  Arizona,  and 
Mexico  have  no  denned  connection  with  solid  masses  of  pyrite,  although 
they  are  frequently  secondary  sulphides.  Except  in  the  case  of  cuprif- 
erous pyrite,  which  sometimes  occurs  in  very  large  homogenous  masses 
with  little  admixture  of  foreign  substances,  commercial  copper  is  in- 
variably a  mixture  of  the  true  ore  with  a  large  proportion  of  country 
rock  or  other  minerals,  technically  known  as  "gangue." 

World's  Production. — The  total  production  of  copper  in  the  world 
was  1,395,160  metric  tons  in  1918;  in  1917  the  production  was  1,435,721 
metric  tons  and  in  1916  it  was  about  1,408,280  metric  tons.  In  1918  the 
copper  output  of  the  United  States  was  60.8  per  cent,  of  the  world's 
total  production,  in  1917  it  was  60.3  per  cent.,  and  in  1916  it  was  about 
62.6  per  cent. 

If  we  add  the  production  of  Canada  and  Mexico,  where  the  mines 
have  almost  invariably  some  connection  with  those  in  the  United  States, 
we  get  the  total  output  of  North  America;  which  was,  for  1917,  67.1 
per  cent.,  and  in  1918,  70.0  per  cent.,  of  the  world's  product. 

WORLD'S  PRODUCTION  OF  COPPER  (a) 


Year 

Metric 
tons 

Short 
tons 

Year 

Metric 
tons 

Short 
tons 

Year 

Metric 
tons 

Short 
tons 

1885 

229,315 

252,828 

1897 

412,818 

455,147 

1908 

758,065 

835,623 

1886 

220,669 

243,295 

1898 

441,282 

486,529 

1909 

854,758 

942,408 

1887 

226,492 

249,716 

1899 

476,194 

525,021 

1910 

877,494 

966,998 

1888 

262,285 

281,179 

1900 

491,435 

541,561 

1911 

879,751 

969,750 

1889 

265,516 

292,741 

1901 

529,508 

583,517 

!   1912 

,011,312 

1,114,769 

1890 

274,065 

302,166 

|   1902 

542,606 

597,951 

1913 

,002,284 

1,104,517 

1891 

280,138 

308,862 

1903 

630,590 

694,910 

1914 

934,888 

1,018,395 

1892 

309,113 

340,808 

1904 

693,240 

764,758 

1915 

,094,803 

1,206,793 

1893 

310,704 

342,562 

1905 

698,931 

770,221 

1916 

,408,280 

1,552,347 

1894 

330,075 

363,920 

1906 

715,510 

788,492 

1917 

,435,721 

1,582,595 

1895 

339,994 

374,856 

1907 

724,120 

798,205 

1918 

,395,160 

1,537,884 

1896 

384,493 

423,917 

(a)  The  statistics  for  1885-1891  are  as  reported  by  Henry  R.  Merton  &  Co.;  1892-1918  as  per 
MINERAL  INDUSTRY. 


PRODUCTION  AND  PROSPECTS  OF  COPPER 


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182 


THE  COST  OF  MINING 


The  following  table  shows  the  growth  of  the  American  copper  industry 
from  its  beginning  to  the  end  of  1918: 

MAGNITUDE  AND  GBOWTH  OF  COPPER  PRODUCTION  IN  THE  UNITED  STATES  FROM 

1845  TO  1918,  INCLUSIVE 


Year 

Production 

Increase 

Average  annual  increase 
by  decades 

Pounds 

Pounds 

Per  cent. 

Pounds 

Per  cent. 

1845 

224,000 

1846 

336,000 

112,000 

50.0 

1847 

672,000 

336,000 

100.0 

242,400 

50.0 

1848 

1,122,000 

450,000 

67.0 

1849 

1,568,000 

426,000 

40.0 

1850 

1,456,000 

(a)  112,000 

(a)7.1 

1851 

2,016,000 

560,000 

23.1 

1852 

2,464,000 

448,000 

22.2 

1853 

4,480,000 

2,016,000 

81.8 

1854 

4,990,000 

510,000 

12.5 

1855 

6,720,000 

1,730,000 

33.3 

1,467,200 

28.5 

1856 

8,960,000 

2,240,000 

33.3 

1857 

10,752,000 

1,792,000 

20.0 

1858 

12,320,000 

1,568,000 

14.6 

1859 

14,112,000 

1,792,000 

14.5 

1860 

16,128,000 

2,016,000 

14.3 

1861 

16,800,000 

672,000 

4.1 

1862 

21,160,000 

4,360,000 

20.0 

1863 

19,040,000 

(a)2,120,000 

(a)5.5 

1864 

17,920,000 

(a)  1,120,  000 

(a)5.9 

1865 

19,040,000 

1,120,000 

6.3 

1,209,600 

6.2 

1866 

19,936,000 

896,000 

4.7 

1867 

22,400,000 

2,464,000 

12.3 

1868 

25,984,000 

3,584,000 

16.0 

1869 

28,000,000 

2,016,000 

7.7 

1870 

28,224,000 

224,000 

1.0 

1871 

29,120,000 

896,000 

3.2 

1872 

28,000,000 

(a)  1,120,000 

(a)3.8 

1873 

34,720,000 

6,720,000 

24.0 

1874 

39,200,000 

4,480,000 

12.9 

1875 

40,320,000 

1,120,000 

2.9 

1876 

42,560,000 

2,240,000 

5.6 

3,225,600 

8.2 

1877 

47,040,000 

4,480,000 

10.5 

1878 

48,160,000 

1..  120,  000      2.4 

1879 

51,520,000 

3,360,000 

7.0 

1880 

60,480,000 

8,960,000 

17.4 

1881 

71,680,000 

11,200,000 

18.6 

. 

1882 

90,646,232 

8,966,232 

12.5 

1883 

115,526,053 

24,886,221  ]    27.4 

1884 

144,946,653 

29,420,600 

25.5 

1885 

165,875,766 

20,929,113 

14.4 

1886 

156,735,381 

(a)  9,  140,385 

(a)5.5 

18,930,349 

14.8 

1887 

180,920,524 

24,185,143 

15.4 

1888 

226,361,466 

45,440,942 

25.1 

1889 

226,775,962 

414,496 

0.2 

1890 

259,763,092 

32,987,130 

14.5 

PRODUCTION  AND  PROSPECTS  OF  COPPER 


183 


MAGNITUDE  AND  GROWTH  OF  COPPER  PRODUCTION  IN  THE  UNITED  STATES  FROM  1845 
TO  1918,  INCLUSIVE — Continued 


Year 

Production 

Increase 

Average  annual  increase 
by  decades 

Pounds 

Pounds 

Per  cent. 

Pounds. 

Per  cent. 

1891 

284,121,764 

24,358,672 

9.4 

) 

1892 

344,998,679 

60,876,915 

21.5 

1893 

329,354,398 

(a)  15,  644,281 

(a)4.5 

1894 

354,188,374 

24,833,976 

7.5 

1895 

380,613,404 

26,425,030,              7.4 

34,635,407 

9.4 

1896 

460,061,430 

79,448,026 

20.9 

1897 

494,078,274 

34,016,844 

7.4 

1898 

526,512,987 

32,434,713 

6.6 

1899 

568,666,921 

42,153,934 

8.0 

1900 

606,117,166 

37,450,245 

6.6 

1901 

602,072,519 

(a)4,044,647 

(o)0.7 

1902 

659,508,644 

57,436,125 

9.5 

1903 

698,044,517 

38,535,873 

5.8 

1904 

812,537,267 

114,492.750 

16.4 

47,404,234 

6.1 

1905 

888,784,267 

76,247,000 

10.6 

1906 

917,805,682 

29,021,415 

3.3 

1907 

868,996,491 

(a)48,809,191 

(a)5.3 

- 

1908 

942,570,721 

73,574,230 

8.4 

1909 

1,092,951,624 

150,380,903 

16.0 

1910 

1,080,159,509 

(a)  12,792,  115 

(a)   1.2 

1911 

1,097,232,749 

17,073,240 

1.6 

1912 

1,243,268,720 

146,035,971 

13.3 

1913 

1,224,484,098 

(a)  18,784,622 

(a)  1.5 

1914 

1,150,137,192 

(a)74,346,906 

(a)  6.1 

91,046,761 

6.9 

1915 

1,388,009,527 

237,872,335 

20.7 

1916 

1,927,850,548 

539,841,021 

28.0 

1917 

1,886,120,721 

(o)41,729,827 

(a)  2.2 

1918 

1,908,533,595 

22,412,874 

1.2 

(a)  Decrease. 


SUMMARY 


Years 

Total 
production, 
pounds 

Average  annual  increase 

Quantity, 
pounds 

Per  cent. 

1845-1918 
1845-1881  (First  half) 
1882-1918  (Second  half) 

27,106,589,103 
799,624,000 
26,306,965,103 

24,808,750 
2,034,333 
43,895,108 

12.2 
17.2 
8.5 

The  copper  production  of  the  various  states  of  the  United  States  for 
the  past  six  years  is  given  in  the  following  table. 


184 


THE  COST  OF  MINING 


PH  3 

O  O 

O  PM 

O  w 


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(M    CO    r-M 


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(NOO(MT-i 
CC 


'-i  OOfO 


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PRODUCTION  AND  PROSPECTS  OF  COPPER  185 

MINE   PRODUCTION  OF  COPPER  IN  THE  PRINCIPAL  DISTRICTS  "IN  1916,  IN  POUNDS 


District  or  region 

State 

Mine  output 

Percent- 
age of 
total  pro- 
duction 

Rank 

Butte 

Montana 

349  500  000 

17   42 

1 

Lake  Superior  
Bingham  , 
Globe-Miami  

Michigan  
Utah  
Arizona  

269,794,000 
223,619,000 
220,000,000 

13.45 
11.15 
10.97 

2 
3 

4 

Bisbee  
Copper  River 

....do  
Alaska 

193,696,000 
105  600  000 

9.66 
5  26 

5 

6 

Jerome  

Arizona  

102,000,000 

5  09 

7 

Ely  . 

Nevada  .    . 

93,044,000 

4  64 

8 

Ray  (Mineral  Creek)  

Arizona  

76,700,000 

3.82 

9 

Morenci-Metcalf  

do  

75,900,000 

3  78 

10 

Santa  Rita  (Central) 

New  Mexico 

74  228  000 

3  71 

11 

Shasta  County  
Ducktown  .  .  . 

California  
Tennessee 

39,700,000 
14  556  000 

1.98 
0  73 

12 
13 

Prince  William  Sound  
Pioneer  

Alaska  
Arizona  

10,660,000 
9,145,000 

0.53 
0.46 

14 
15 

Burro  Mountain  

New  Mexico  .  . 

9,392,000 

0.42 

16 

Tintic  
Pima  .  . 

Utah  
Arizona 

7,085,000 
6,683,000 

0.35 
0  33 

17 
18 

Foothills  Belt  
Cochise  

California. 
Arizona  

6,460,000 
6,204,000 

0.32 
0  31 

19 
20 

Alder  Creek 

Idaho 

5  499  000 

0  27 

21 

Plumas  

California  

5,150,000 

0.26 

22 

Banner 

Arizona 

5,041,000 

0  25 

23 

Lordsburg  
Planet 

New  Mexico  .  . 
Arizona 

4,755,000 
3,929,000 

0.24 
0  20 

24 
25 

Big  Bug  

do  

3,612,000 

0.18 

26 

Ketchikan 

Alaska 

3,526,000 

0  18 

27 

Courtland  (Turquoise)  
Ophir  

Arizona  
Utah  

3,250,000 
2,702,000 

0.16 
0.13 

28 
29 

San  Juan-Ouray  region  
Leadville  
Santa  Fe 

Colorado  
do  
Nevada 

2,640,000 
2,620,000 
2,547,000 

0.13 
0.13 
0  13 

30 
31 
32 

Coeur  d'  Alene  region  ...         ... 

Idaho  

2,200,000 

0.11 

33 

New  Placer 

New  Mexico  .  . 

2,153,000 

0.11 

34 

Oro  Grande 

do 

2,077,000 

0  10 

35 

Helvetia  

Arizona  

1,958,000 

0.10 

36 

Peck. 

do 

1,618,000 

0  08 

37 

Trinity  
San  Bernardino  . 

California  
do        

1,575,000 
1,525,000 

0.08 
0.08 

38 
39 

Patagonia 

Arizona 

1,244,000 

0  06 

40 

Copper  Basin 

.  .  .do  

1,225,000 

0.06 

41 

Goldfield 

Nevada 

1,165,000 

0  06 

42 

Uinta-Summit  (Park  City)     .... 

Utah  

1,163,000 

0.06 

43 

Bentley  

Arizona  

1,064,000 

0.05 

44 

Railroad 

Nevada  .  .  . 

1,012,000 

0  05 

45 

1  958  216  000 

All  others 

47,659,000 

Grand  total 

2  005  875  000 

186  THE  COST  OF  MINING 

An  interesting  view  of  the  broad  features  of  the  copper  mining  business 
may  be  had  from  the  following  table,  which  shows  that  of  all  the  ores 
treated  in  the  United  States  in  1916  one-ninth  are  smelted  direct  and 
eight-ninths  concentrated.  The  concentrated  ores  are  reduced  to  8.7 
per  cent,  of  their  original  volume  before  smelting.  Adding  this  to  the 
amount  smelted  crude  we  find  the  total  percentage  smelted  to  be  17.5 
per  cent.  The  average  copper  yield  of  all  ores  mined  was  34.0  Ib.  per 
ton  or  1.70  per  cent.  The  yield  from  ores  smelted  direct  was  94.4  Ib. 
per  ton  or  4.72  per  cent.  The  yield  per  ton  of  concentrating  ore  was 
25.6  Ib.  per  ton  or  1.28  per  cent.;  while  the  resulting  concentrates  yielded 
298  Ib.  per  ton  or  14.9  per  cent. 

A  rough  estimate  of  the  plants  required  to  perform  the  processes 
indicated  is  as  follows : 

Mining,  milling,  and  smelting  plants  with  transportation  facilities  be- 
tween mines,  mills,  and  smelters,  at  $4.50  per  ton  of  annual  capa- 
city for  50,000,000  tons  of  concentrating  ore $225,000,000 

Mining  and  smelting  plants  for  6,500,000  tons  smelting  ore  at  $7  per 

ton  of  annual  capacity $  45,000,000 

Total  plant  required $270,000,000 

This  estimate  was  intended  to  cover  only  such  transportation  lines 
as  are  owned  by  mining  companies,  not  the  longer  lines  owned  by  rail- 
road companies  that  are  used  to  carry  ores,  concentrates,  matte,  or 
bullion  for  great  distances. 

The  various  refineries  will  perhaps  bring  up  the  capital  in  plants  by 
an  additional  $50,000,000,  making  a  total  plant  employed  in  the  copper- 
mining  business  of  at  least  $320,000,000.  Thisestima  te  refers  only  to 
the  successful  and  active  plants.  The  addition  of  failures  and  discarded 
plants  would  undoubtedly  show  a  largely  increased  figure.  Computing 
the  future  life  or  the  average  mine  at  fifteen  years,  the  amortization  of 
capital  is  10  per  cent.  To  this  we  must  add  6  per  cent,  for  annual  depre- 
ciation, so  that  a  total  charge  of  16  per  cent,  must  be  made  for  the  use  of 
capital.  On  $320,000,000  this  annual  charge  is  $51,200,000,  or  nearly 
3  cents  a  pound  on  the  output  of  1917. 

Under  the  conditions  of  1919  this  estimate  would  have  to  be  increased 
70  per  cent.  Of  course,  w\th  the  expansion  of  the  business  accomplished 
in  10  years  the  total  figures  would  be  much  higher. 

It  may  occur  to  many  readers  that  in  the  following  chapters  undue 
prominence  is  given  to  copper  as  compared  with  other  mineral  products. 
It  will  be  found  however  that  the  copper  mines  are  a  convenient  starting 
point  for  the  discussion  of  all  sulphide  mines,  and  that  includes  almost 
all  metal  mines  except  iron. 

That  copper  mining  and  smelting  is  not  an  unimportant  business  is 
shown  by  the  fact  that  up  to  January  1st,  1919  a  list  of  58  copper  mining 
companies,  certainly  not  a  complete  list,  have  paid  $1,178,000,000  in 


PRODUCTION  AND  PROSPECTS  OF  COPPER 


187 


COPPER  ORES  CONCENTRATED  AND  SMELTED  AND  COPPER  PRODUCED  FROM  EACH 
CLASS  OF  ORE  IN  THE  UNITED  STATES  IN  1916 


State 

Ore  concentrated 

Ore  smelted 

Quantity, 
short 
tons 

Concen- 
trates 
pro- 
duced, 
short 
tons 

Copper 
in 
concen- 
trates, 
pounds 

Per- 
cent- 
age of 
copper 
from 
ore 

Quantity, 
short 
tons 

Copper 
produced, 
pounds 

Per- 
cent- 
age of 
copper 
from 
ore 

Alaska            

407,520 
12,790,255 
214,793 

51,353 

812,872 
16,246 

38,977,410 
335,522,300 
5,971,595 

4.78 
1.31 
1.39 

209,744 
3,701,716 
718,929 
34,429 
31,043 
75,909 

80,877,429 
384,180,489 
49,821,007 
2,977,285 
803,699 
5,924,652 

19.28 
5.19 
3.47 
4.32 
1.31 
3.90 

Arizona  

California  

Idaho  

37,141 
12,364,114 

1,665 

218,489 

643,042 
273,692,525 

0.87 
1.08 

Michigan 

124 
587,501 
171,702 
103,544 
165 
35,409 

3,580 
482,495 
2,081 
732,680 
1,318 
29,578 
6,063 

18,200 
52,382,319 
16,364,531 
7,400,263 
9,800 
3,580,496 

544,484 
14,679,794 
99,569 
29,962,228 
148,372 
1,913,507 
2,610,622 

7.34 
4.46 
4.77 
3.07 
3.00 
5.05 

7.60 
1.52 
2.40 
2.04 
5.63 
3.22 
21.53 

5,610,477 
3,975,254 
3,349,366 

1,929,232 
531,573 
280,434 

290,282,734 
88,234,979 
80,193,232 

2.59 
1.11 

1.19 

Nevada  
New  Mexico  

Pennsylvania,  Mary- 
land, and  Virginia.  . 
Tennessee           .    . 

200,950 

8,844 

793,096 

0.19 

Texas                     .    . 

Utah  

11,943,472 
3,361 

38,652 

559,840 
870 
3,221 

199,997,786 
125,058 
670,723 

0.84 
1.86 
0.87 

Washington           .... 

Total  and  average  . 

50,935,355 

4,414.639 

1,315,104,480 

1.28 

6,928,010 

654,298,746 

4.72 

dividends.  A  few  of  these  concerns  are  in  Canada  and  South  America, 
but  their  aggregate  dividends  are  certainly  less  than  those  of  U.  S.  mines 
that  are  omitted — a  good  deal  less.  The  total  output  of  copper  credited 
to  the  United  States  is  some  27  billion  pounds.  It  is  safe  to  say  that  the 
dividends  in  normal  times  have  averaged  about  4  cents  per  pound.  The 
total  profits  compared  to  those  in  the  iron  business  might  seem  to  be 
small,  but  it  must  be  remembered  that  none  of  the  profits  of  the  copper 
business  come  from  manufacturing  as  is  the  case  with  most  of  the  promi- 
nent steel  companies. 


188 


THE  COST  OF  MINING 


COPPER   DERIVED    FROM   ORE   CLASSED    AS  COPPER  BEARING    (COPPER,   COPPER- 
LEAD,  COPPER-ZINC  ORES),  AND  TOTAL  PRODUCTION  OF  COPPER  FROM  ALL 
SOURCES  IN  THE  UNITED  STATES  IN  1916 


State 

Ore 
treated, 
short  tons 

Copper 
recovered, 
pounds 

Per- 
cent- 
age of 
copper 

Copper  from 
all  sources 
including 
old  slags, 
smelter 
cleanings, 
and 
precipitates, 
pounds 

Alaska 

617,264 

119  854  839 

9  70 

119  854  839 

16  515  151 

720  572  546 

2  18 

712  833  169 

933  722 

55  792  602 

2  97 

55  897  118 

Colorado  &  

37,558 

3,276,524 

4.36 

8,624,081 

Georgia         

31,043 

803,699 

1  30 

803,699 

113,072 

6,585,197 

2  91 

8,478,281 

12,364,114 

273,692,525 

1  08 

273,692,525 

Missouri  
Montana  d  

124 
6,238,087 
4,149,802 

18,200 
348,978,298 
104,799,723 

7.34 
2.80 
1  27 

«  386,200 
352,928,373 
105  116  813 

3,453,971 

87,701,873 

1  27 

92  747  289 

165 

9,800 

3  00 

9  800 

35,409 

3,580  496 

5  05 

3  581  886 

204,530 

1,337,580 

0  32 

1  337  580 

482  495 

14,679,794 

1  52 

14  679  794 

Texas            

2,081 

99,569 

2.40 

99,569 

Utah                       

12,685,797 

230,519,968 

0.92 

240,275,222 

4,679 

273,430 

2.92 

273,430 

68,230 

2,584,230 

1.89 

2,645,022 

6,063 

2,610,622 

21   53 

2,610,622 

57,953,357 

1,977,771,515 

1  70 

2,005  875  312 

0  Considerable  copper  was  recovered  from  old  slags  and  ores  not  classed  as  copper  ores. 

6  Most  of  the  copper  from  Colorado  is  derived  from  ores  classed  as  siliceous  ores  and  lead  ores. 

e  Mainly  recovered  in  dressing  lead  ores. 

*  Considerable  copper  was  recovered  as  precipitates  from  mine  waters  and  from  ores  not  classed  as 
copper  ores. 

•  A  large  quantity  of  copper  was  derived  from  ores  classed  as  lead  ores,  lead-zinc  ores,  and  siliceous  ores. 


CHAPTER  XII 

THE  SOUTHWEST  COPPER  FIELD 

AREA  AND  IMPORTANCE — CLIMATE — GEOGRAPHY — THE  PLATEAU  REGION — MOUNTAIN 
REGION — DESERT  REGION — TALUS  SLOPES  AND  RESERVOIRS — TRANSPORTATION 
— POPULATION  AND  ETHNOLOGY. 

The  greatest  copper-producing  region  of  the  world  may  be  described 
as  a  rough  oval  of  about  40,000  square  miles,  measuring  about  330  miles 
north  and  south  and  165  miles  east  and  west.  Its  most  easterly  extremity 
is  at  the  Chino  mine,  near  Santa  Rita,  New  Mexico;  its  most  westerly, 
at  Ajo,  Ariz.;  its  most  northerly  point  is  Jerome,  Ariz.,  and  its  most 
southerly,  Nacozari,  Mexico.  In  New  Mexico  are  the  districts  of  Santa 
Rita  and  Burro  Mountains;  in  Old  Mexico,  those  of  Nacozari  and 
Cananea;  in  Arizona,  those  of  Bisbee,  Ray,  Globe,  Clifton,  Jerome, 
Ajo,  and  a  number  of  smaller  ones.  Thus,  much  the  greater  part  of 
the  field  lies  in  Arizona,  and,  as  nearly  as  may  be  estimated,  this  area 
produced  27  per  cent,  of  the  world's  output  of  copper  in  1917,  36  per 
cent,  of  the  production  of  the  two  Americas,  and  an  amount  equal  to 
47  per  cent,  of  that  of  the  United  States.  Its  actual  production  is 
shown  in  the  table  on  the  following  page. 

The  tables  do  not  give  an  exact  comparison  of  the  field  under  dis- 
cussion with  the  other  subdivisions  of  the  world,  because  the  whole  of 
Mexico  is  included,  and  only  a  part  of  that  country  may  properly  be 
considered  to  be  in  this  field.  It  is  rarely  possible  for  such  data  to 
be  accurate  in  all  respects;  but,  with  the  above  explanation,  the  figures 
will  serve  their  purpose.  They  are  compiled  from  statistics  published 
in  the  Engineering  and  Mining  Journal,  Jan.  12,  1918. 

This  vast  copper  region  deserves  more  than  a  passing  description. 
Geographically  it  bears  considerable  resemblance  to  Spain  and  Morocco, 
corresponding  fairly  well  to  those  countries  in  latitude  and  with  regard 
to  bordering  ocean;  and,  therefore,  to  a  large  extent  in  climate  and 
physical  appearance.  The  central  part  is  in  latitude  32°  N.  and  is  about 
180  miles  from  the  Gulf  of  California.  The  region  is  arid  to  semi-arid,  the 
rainfall  varying  from  6  to  8  in.  annually  at  Ajo  to  16  or  18  in.  at  Globe. 
The  climate  naturally  varies  according  to  differences  of  altitude,  the 
local  topography,  which  influences  rainfall  and  winds,  and,  to  a  minor 
extent,  to  difference  of  latitude.  The  altitude  is  from  2000  ft.  at  Ajo 
to  6000  ft.  at  Cananea.  A  rough  average  of  the  whole  may  be  found  at 
Cochise,  situated  in  latitude  32°  N.  at  an  elevation  of  4250  ft.  Here 

189 


190 


THE  COST  OF  MINING 


the  mean  temperature  for  the  year  1916  was  60.5°  F.,  with  a  maximum 
of  102°  in  July  and  a  minimum  of  6°  in  December.  The  normal  pre- 
cipitation is  11.78  in.,  but  it  probably  varies  in  different  years  between 
8  and  16  inches. 

The  latitude  is  sub-tropical,  and,  of  course,  the  district  is  decidedly 
warmer  than  that  of  the  more  populous  parts  of  the  country;  but  popular 
fancy  exaggerates  the  difference.  Even  Yuma,  which  is  outside  this 
area,  practically  at  sea  level,  near  the  mouth  of  the  Colorado  River, 
and  celebrated  as  the  "  hottest  place  in  the  world,"  or  something  to  that 
effect,  has  not  even  an  average  tropical  heat.  The  mean  for  1916  was 
only  69.2°,  the  temperature  varying  between  110°  and  20°.  The  hot- 
test month,  August,  had  a  mean  of  86.5°.  At  the  Prescott  Dry  Farm, 
at  an  elevation  of  5008  ft.,  the  temperature  varied  in  1916  between  95° 
and  7°.  At  Phcenix,  elevation  1108  ft.,  the  extremes  were  111°  in  June 
and  24°  in  December,  indicating,  as  compared  with  Prescott,  a  difference 
in  the  extremes  of  temperature  of  about  16°  for  3900  ft.  of  elevation. 

TABLE  OF  COPPER  OUTPUT  IN  POUNDS 


State 

1914 

1915 

1916 

1917 

Arizona.  . 

387,978,000 

444,089,000 

692,630,000 

692,924,000 

New  Mexico  
Old  Mexico 

64,339,000 
80  000,000 

75,515,000 
67.000  000 

83,013,000 
112,000  000 

101,952,000 
90  000  000 

Totals 

532  317  000 

586  604  000 

887  643  000 

884  876  000 

Total  United  States  .  . 

1,158,582,000 

1,423,698,000 

1,942,776,000 

1,888,396,000 

Total  Western  Hemisphere 
Total  world   

1,479,800,000 
2,050,000,000 

1,797,959,000 
2,388,540,000 

2,429,749,000 
3,099,602,000 

2,392,144,000 
3,114,475,000 

PERCENTAGE  PRODUCED  BY  ARIZONA,  NEW  MEXICO  AND  OLD  MEXICO 


1914 

1915 

1917 

1917 

Of  the  United  States  
Of  the  Western  Hemisphere  
Of  the  world  

45 
36 
26 

41 
33 
26 

45.7 
36.5 
28  6 

47.0 
36.2 

27.8 

PERCENTAGE  OF  WORLD  OUTPUT  PRODUCED  IN  WESTERN  HEMISPHERE 

1914  1915  1916  1917 

72.2  75.2  78.4  77 

The  rainfall  comes  regularly  in  two  rainy  seasons :  a  winter  season, 
culminating  usually  in  January  or  February;  and  a  summer  season,  in 
July  and  August.  There  are  usually  about  five  months,  ineach'of  which 
the  precipitation  is  one  inch  or  over;  in  the  other  seven  months  the  fall 
is  scant.  Thus,  at  Cochise  in  1916  the  total  for  the  year  was  14.69  in., 
of  which  12.99  in.,  or  89  per  cent.,  fell  in  the  five  months  of  January, 


THE  SOUTHWEST  COPPER  FIELD 


191 


July,  August,  September  and  October,  the  other  seven  months  having 
only  1.70  in.  or  11  per  cent. 

The  record  of  climatic  observations  at  Cochise  is  given  in  the  twenty- 
seventh  annual  report  of  the  agricultural  experiment  station  of  the  Uni- 
versity of  Arizona,  for  1916,  and  is  shown  in  the  table. 

F.  L.  Ransome,  certainly  one  of  the  most  brilliant  of  geological  writers, 
has  followed  the  classic  example  of  Caesar  with  regard  to  Gaul  by  dividing 
Arizona  into  three  parts — the  plateau  region,  the  mountain  region,  and 
the  desert  region.  Though  the  boundaries  are  in  places  somewhat  in- 
distinct, in  general  the  division  is  an  apt  and  a  true  one. 

The  mines  are  practically  all  in  the  central  or  mountain  belt;  but  since 
the  conditions  of  life,  in  these  days  of  swift  and  improving  transportation, 
are  influenced  by  the  region  as  a  whole,  as  well  as  by  the  immediate  local 
surroundings  of  the  inhabitants,  it  is  not  inappropriate  to  take  note  of 
the  climate  and  aspect  of  the  three  belts.  One  cannot  but  be  impressed 

TEMPERATURE  AND  PRECIPITATION — SOUTHWEST  COPPER  FIELD 


Month 

Temperature,  degrees 

Precipitation, 
inches 

Maximum 

Minimum 

Mean 

January  

71 
80 
86 
89 
95 
101 
102 
97 
91 
86 
85 
74 

14 
18 
28 
29 
37 
42 
58 
56 
43 
32 
22 
6 

45.2 
51.0 
56.3 
58.6 
64.6 
76.2 
78.0 
75.2 
70.8 
60.7 
49.5 
40.1 

2.20 
0.48 
0.63 
0.08 
0.28 
0.00 
3.78 
4.10 
1.55 
1.36 
0.00 
0.23 

February 

March  

April 

May  

June  .  .                       .            . 

July 

August  

September 

October 

November  

December 

Year  ....                 

102 

6 

60.5 

14.69 
11.78 

Normal 

by  the  variety  of  scenes,  and  perhaps  surprised  at  the  inaccuracies  of  his 
geography.  That  was  my  experience.  Having  traveled  extensively  in 
the  United  States,  sometimes  upward  of  40,000  miles  a  year  1  had  fallen 
into  the  conceit  of  assuming  that  I  knew  the  country.  Travel  had  be- 
come a  bore,  and  I  had  even  come  to  feel  interested  only  when  I  could 
get  off  the  train;  and  I  looked  out  of  the  windows  solely  because  there 
was  nothing  else  to  do.  Probably  many  like  myself  get  into  a  rut  of 
preoccupation  and  fail  in  a  similar  way  to  get  satisfaction  out  of  their 
opportunity,  or  through  the  necessity  of  travel.  To  find  a  place  interest- 
ing is  to  be  interested.  Many  mining  men  are  of  broad  intelligence,  able 


192  THE  COST  OF  MINING 

to  take  a  big  place  in  the  world's  affairs,  as  Mr.  Hoover  has,  but  I  think 
there  are  many  who  see  little  in  a  mining  country  except  the  mines. 

There  is  also  a  good  deal  of  literature  published  by  fanciful  persons 
who  make  their  product  a  caricature  of  local  color.  From  such  "authori- 
ties" one  gains  impressions  that  the  unusual  is  the  usual.  To  quote  my 
own  experience  once  more,  I  had  gained  the  impression,  somehow,  that 
Arizona  was  a  monotonous  expanse  of  dusty  desert,  sparsely  covered  with 
greasewood  and  grotesque  cacti,  relieved  only  by  an  occasional  sandy 
wash  where  there  would  be  streams  if  there  were  any  water,  and  by 
lonely  bare  mountains  well  scorched  by  the  sun.  There  are  such  stretches 
in  Arizona,  but  they  serve  only  to  help  give  the  state  some  of  its  variety 
and  interest. 

Northern  Arizona  Plateau  Land. — The  great  Coconino  plateau  of 
northern  Arizona  is  said  to  contain  the  largest  reserve  of  uncut  pine 
timber  in  the  United  States.  Above  it  rise  the  San  Francisco  peaks, 
volcanoes  recently  extinct,  nearly  13,000  ft.  high  and  nearly  always  cov- 
ered with  snow.  Flagstaff,  a  lumbering  town  at  their  base,  at  an  altitude 
of  6900  ft.,  has  a  climate  like  Minnesota.  The  mean  average  temperature 
is  only  44°.  Its  precipitation  is  greater  than  that  of  any  place  along  the 
California  coast  south  of  San  Francisco;  greater,  I  believe,  than  at 
San  Francisco.  Government  records,  not  mere  rumors,  show  tem- 
peratures as  low  as  25°  below  zero,  such  as  are  not  felt  in  New  York  once 
in  a  lifetime.  This  plateau  is  not  a  small  part  of  the  region,  but  a  very 
large  part,  lying  immediately  north  of  the  mining  districts.  The  U.  S. 
Geological  Survey  (Guidebooks  of  the  Western  United  States,  Santa 
Fe  Route,  Bull.  613,  a  most  interesting  and  instructive  volume,  by  the 
way)  has  this  to  say: 

From  Isleta,  an  Indian  pueblo  on  the  Rio  Grande,  which  -flows  into  the  Gulf 
of  Mexico,  the  railway  begins  its  long  journey  across  the  interesting  plateau 
country,  which,  with  its  bordering  areas,  extends  almost  to  the  Colorado  River, 
which  flows  into  the  Pacific.  This  vast  area  of  high,  nearly  level  country  lies 
between  the  rugged  and  generally  higher  ranges  of  the  Rocky  Mountains  on  the 
north  and  the  alternating  short  ranges  and  deserts  of  the  lower-lying  north  end 
of  the  Mexican  plateau  to  the  south. 

This  is  a  land  of  varied  landscapes,  rocks  and  people.  In  places  the  plains  and 
cliffs  are  vividly  colored  by  natural  pigments  of  red  and  vermilion.  The  rocks 
of  the  plateau  are  surmounted  by  two  large  volcanic  piles,  which  stand  far  above 
the  general  level  of  the  plain  and  which  were  master  volcanoes  in  but  compara- 
tively recent  time — Mount  Taylor  on  the  east  and  the  San  Francisco  Mountains 
on  the  west.  From  the  immensely  thick  and  almost  horizontal  sediments  that 
compose  most  of  the  mass  of  the  plateau,  layer  after  layer  has  been  eroded  away 
over  wide  areas,  leaving  remnants  of  harder  strata  which  make  picturesque  hills 
and  valleys  and  expose  fossil  forests  which  long  ago  were  buried  in  the  sediments 
of  which  these  strata  are  made.  Erosion  has  also  carved  many  canyons,  notably 
the  majestic  Grand  Canyon  of  the  Colorado. 


THE  SOUTHWEST  COPPER  FIELD  193 

Here  and  there  in  the  rocky  cliffs  and  canyons  are  the  present  and  former  com- 
munal homes  of  the  aboriginal  peoples,  whose  arts  and  religious  ceremonies  partly 
lift  the  veil  of  the  past  and  reveal  glimpses  of  the  earlier  stages  of  the  human 
culture.  These  vast  expanses  were  long  ago  the  abode  of  aboriginal  tribes;  later 
they  were  explored  and  dominated  by  the  mounted  Spanish  conquistador -es;  and 
finally  they  have  been  made  accessible  to  all  by  the  comfortable  railway  of  today. 
The  plateau  country  and  its  approaches,  in  all  their  aspects — geologic,  ethnologic 
and  historical — form  a  region  which  will  hold  the  attention  of  all  passers-by  in 
whom  there  exists  a  spark  of  appreciation  for  striking  natural  phenomena  and 
significant  human  events. 

I  quote  further  from  the  publications  of  the  U.  S.  Geological  Survey 
(Professional  Paper  98-K,  by  F.  L.  Ransome)  to  get  a  broader  description: 

The  plateau  region,  which  has  an  area  of  about  45,000  square  miles  in  Arizona, 
occupies  the  northeastern  part  of  the  state  and  drains  generally  northward  through 
the  Little  Colorado  and  smaller  streams  into  the  Grand  Canyon.  The  general 
altitude  of  this  region,  which  is  a  part  of  the  great  Colorado  Plateau,  ranges  from 
7000  to  over  8500  ft.  As  Button  graphically  states: 

"Its  strata  are  very  nearly  horizontal,  and,  with  the  exception  of  the  Cataract 
Canyon  and  some  of  its  tributaries,  not  deeply  scored.  Low  mesas,  gently  rolling 
and  usually  clad  with  an  ample  growth  of  pine,  pinon,  and  cedar;  broad  and  shal- 
low valleys,  yellow  with  sand  or  gray  with  sage,  repeat  themselves  over  the  entire 
area." 

Here  and  there  the  Kaibab  limestone  (Pennsylvanian,  late  Carboniferous), 
the  prevalent  surface  rock,  is  covered  by  flows  of  basalt  or  bears  erosion  remnants 
of  younger  strata;  and  above  it,  north  of  Flagstaff,  rise  the  lofty  extinct  volcanoes 
of  the  San  Francisco  Mountains. 

The  southwestern  limit  of  the  plateau  traverses  in  a  general  southeasterly 
direction  from  the  Grand  Wash  Cliffs,  near  the  eastern  border  of  Nevada,  to  the 
New  Mexico  line,  a  few  miles  northeast  of  Clifton.  This  boundary  along  much 
of  its  course  is  a  single  bold  escarpment  2000  ft.  or  more  in  height;  but  elsewhere 
it  is  less  definite  and  less  simple,  owing  to  a  distribution  of  the  total  difference  in 
relief  among  a  series  of  great  topographic  steps,  or  to  local  accumulations  of 
volcanic  rocks,  especially  basalt.  In  general,  the  outer  or  lower  line  of  cliffs 
separates  nearly  horizontal  and  undisturbed  strata  on  the  northeast  from  faulted 
and  tilted  beds  on  the  southeast;  and  locally,  as  along  the  Grand  Wash  Cliffs,  this 
line  is  itself  a  fault  scarp,  more  or  less  modified  by  erosion. 

The  Grand  Wash  cliffs  rise  precipitously  3000  ft.  or  more  above  the  plains 
to  the  west.  According  to  Lee,  pre-Cambrian  granite  is  exposed  at  their  base  and 
the  Red  wall  limestone  forms  their  crest  and  the  floor  of  the  adjacent  plateau. 
About  45  miles  east  of  the  Music  Mountains  a  second  gigantic  step,  that  of  the 
Aubrey  cliffs  north  of  Seligman,  carries  the  geologic  section  nearly  to  the  top  of 
the  Kaibab  limestone,  which  forms  the  surface  of  the  Coconino  Plateau,  south  of 
the  Grand  Canyon.  South  of  the  Music  Mountains  there  is  another  ample  terrace 
in  the  ascent  from  the  valleys  of  the  mountain  region  to  the  Colorado  Plateau — • 
that  of  the  Truxton  Plateau.  This  bench,  which  lies  between  the  Cottonwood 
and  Aquarius  Cliffs  to  the  west  and  Yampai  Cliffs  and  Juniper  Mountains  to  the 
northeast,  is  described  by  Lee  as  a  granitic  peneplain  partly  covered  with  vol- 
canic rocks. 

13 


194  THE  COST  OF  MINING 

South  of  Ash  Fork  the  continuity  of  the  plateau  escarpment  it  interrupted  by 
flows  of  basalt  that  poured  down  from  the  plateau  to  the  valley  of  the  Verde, 
forming  a  slope  that  has  been  utilized  by  the  Santa  F6,  Prescott  &  Phcenix 
Ry.  between  Ash  Fork  and  Jerome  Junction.  East  of  this  railway  and  north  of 
Jerome  the  edge  of  the  plateau  is  in  general  a  scarp  (part  of  the  Aubrey  Cliffs  of 
Gilbert)  over  2000  ft.  in  total  height,  with  deep  reentrants  and  bold  pinnacled 
promontories. 

Ransome  in  another  place  stops  to  say  that  the  view  from  the  mining 
town  of  Jerome — itself  perched  on  a  steep  escarpment  2000  ft.  above  the 
valley — across  the  broad  Verde  Valley  to  these  red  cliffs,  topped  by  a 
dark  line  of  forest,  all  surmounted  by  the  towering  San  Francisco  peaks, 
is  nearly,  if  not  quite,  as  impressive  as  the  Grand  Canyon  itself. 

East  of  Camp  Verde  a  thick  series  of  basaltic  flows,  with  associated  tuffs, 
has  covered  the  edges  of  the  nearly  horizontal  sedimentary  rocks ;  but  these  beds 
appear  again  at  the  head  of  Fossil  Creek  and  continue  eastward  past  Payson  in 
the  great  southward-facing  cliff  that  marks  the  descent  of  about  2000  ft.  from  the 
Mogollon  Mesa  to  the  Tonto  Basin.  From  Fort  Apache  eastward  to  the  New 
Mexico  line,  the  plateau  boundary  becomes  less  distinct.  Erosion  has  partly 
destroyed  its  continuity,  and  vast  accumulations  of  volcanic  rock  have  obscured 
the  original  plateau  surface. 

The  second  topographic  division,  the  mountain  region,  which  adjoins  the 
plateau  region  on  the  southwest,  is  essentially  a  broad  zone  of  short  and  nearly 
parallel  mountain  ranges,  among  which  are  the  Dragoon,  Chiricahua,  Whetstone, 
Pinaleno,  Galiuro,  Santa  Catalina,  Pinal,  Superstition  and  Mazatzal  (and  many 
others),  extending  diagonally  across  the  state  from  the  southeast  corner  to  Colo- 
rado River.  The  width  of  the  zone  may  be  taken  as  from  70  to  150  miles,  but  its 
southwest  boundary  is  not  susceptible  of  precise  demarcation.  Few  of  the  in- 
dividual ranges  exceed  50  miles  in  length  or  8000  ft.  in  altitude.  Their  general 
trend  is  almost  northwest,  but  near  the  Mexican  border  it  becomes  more  nearly 
north,  and  the  mountain  zone  as  a  whole  coalesces  with  a  belt  of  north  and  south 
ranges  that  extends  through  New  Mexico,  thus  swinging  around  the  plateau  region 
and  bordering  it  on  the  east  also. 

Most  of  these  ranges  consist  mainly  of  quartzites  and  limestones  of  Paleozoic 
or'earlier  age,  resting  with  conspicuous  uncomformity  upon  granitic,  gneissic 
and  schistose  rocks.  All  these  rocks  are  cut  by  later  intrusives,  especially  by 
diabasic  and  monzonitic  rocks,  and  are  partly  covered  by  flows  of  lava.  Struc- 
turally these  ranges  are  characterized  by  the  dominant  part  played  by  faulting 
as  compared  with  folding.  The  great  copper  deposits  of  Arizona,  so  far  as  they 
are  known,  are  all,  except  that  of  Ajo,  within  this  mountainous  zone. 

I  have  quoted  these  descriptions  more  fully,  especially  in  the  case 
of  the  plateau  region,  than  would  at  first  seem  relevant  to  a  discussion 
of  the  mines,  none  of  which  are  found  in  that  area.  But  the  contrast  of 
the  two  areas  is  of  great  interest  to  the  mining  man  because  it  shows  so 
clearly  that  the  mountain  region,  in  which  the  mines  occur,  is  a  pro- 
nounced zone  of  weakness  in  the  earth's  crust.  The  plateau  is  like  a 
great  floe  of  arctic  ice,  through  which  cracks  run  at  occasional  intervals, 


THE  SOUTHWEST  COPPER  FIELD  195 

but  on  the  whole  it  is  solid  and  uniform.  The  mountain  region  resembles 
a  fringe  of  hummocks  bordering  the  floe,  in  which  great  blocks  have  been 
broken  and  tilted,  some  portions  sloping  far  down  below  the  general 
level  and  others  jutting  their  angular  edges  above  it.  At  three  different 
epochs  since  the  Paleozoic  age  has  this  rupturing  taken  place,  and  each 
time  igneous  molten  rock  has  been  squeezed  up  between  and  through 
cracks  in  the  unstable  blocks.  These  huge  fragments  are  parts  of  the 
same  massive  plateau.  The  hummocks,  of  course,  have  been  attacked  by 
erosion,  and  the  spaces  between  are  filled  with  the  debris  which  is  still 
migrating  slowly  into  the  hollows. 

The  ore  deposits,  in  all  cases,  are  caused  by  gases  or  solutions  escaping 
from  the  cooling  igneous  masses,  carrying  metals  which  they  are  able  to 
dissolve  while  the  heat  and  pressure  are  great  enough,  and  depositing 
them  when  they  lose  some  of  their  heat  and  pressure.  This  occurs  when 
the  gases  escape  into  the  inclosing  rocks,  or  into  such  upper  portions  of 
the  igneous  masses  themselves  as  may  have  already  cooled.  The  relation 
between  this  action'  and  the  lines  of  structural  weakness  in  the  earth's 
crust  is  a  simple  and  definite  one,  when  broadly  considered,  and  well 
worth  noting.  It  is  seldom  that  such  a  relationship  is  so  clearly  expressed 
in  the  surface  topography  as  it  is  in  the  examples  noted.  Although  this 
belt  is  described  properly  as  the  mountain  region,  its  average  elevation 
is  considerably  lower  than  that  of  the  adjoining  plateau,  the  loftiest 
peaks  being  little,  if  any,  higher  than  the  plateau  summit.  The  average 
altitude  is  probably  between  4000  and  5000  ft.  The  drainage  is  nearly 
all  westward  through  the  Gila  and  its  tributaries,  although  a  considerable 
area  in  southeastern  Arizona  and  northern  Sonora  drains  into  the  Yaqui 
River.  All  the  drainage  of  the  mining  region  goes  finally  to  the  Gulf  of 
California. 

Only  on  the  higher  summits  will  the  Easterner  see  vegetation  that 
looks  familiar,  with  pines  and  junipers  in  abundance.  The  lower  slopes 
and  broad  valleys  take  on  varying  aspects.  Here,  grassy  plains  and 
slopes  littered  with  yellow  gourds  and  interspersed  with  scattered  live 
oaks;  there,  similar  stretches  clothed  with  a  variety  of  thorny  bushes, 
mesquites  and  greasewood;  elsewhere,  rocky  knobs  covered  with  ocatillas, 
palo  verde  and  chollas — the  most  formidable  and  picturesque  of  the 
cactus  family.  Bare  hills  are  made  to  look  still  more  barren  by  weird 
forests  of  towering  sahuaros — the  giant  cactus.  Yuccas,  in  considerable 
variety,  are  found  almost  everywhere,  with  Joshua  trees,  Spanish  bayo- 
nets, and  soapweeds.  Here  and  there  one  may  see  cottonwoods,  black 
willows,  hackberries,  mountain  ash,  madrona,  sycamore,  black  oak, 
manzanito,  cherry,  squawberry,  ironwood,  box  elder,  walnut,  sage  brush, 
and  many  others.  The  vegetation,  of  course,  is  not  nearly  so  abundant, 
but  seems  quite  as  varied  as  in  the  well-watered  countries  of  the  east  and 
north — so  varied,  so  highly  characteristic,  and  so  well  adapted  to  soil 


196  THE  COST  OF  MINING 

and  climate  that  it  adds  materially  to  the  scenic  wealth  of  the  United 
States. 

" Adjoining  the  mountain  region  on  the  southwest,"  to  quote  Ran- 
some  again,  "is  the  third  topographic  division,  the  desert  region,  which 
also  contains  many  short  ranges  of  mountains  of  prevalent  northwesterly 
trend.  In  this  region,  however,  most  of  the  ranges  are  separated  by 
broad  desert  plains,  underlain  by  fluviatile  and  lacustrine  deposits  of 
late  geologic  age,  or  by  undulating  granitic  lowlands  partly  covered  with 
gravels  and  flows  of  lava.  The  boundary  between  the  mountain  and 
desert  regions  is,  as  previously  stated,  indefinite,  but  may  provisionally 
be  taken  as  a  curved  line  extending  from  Nogales,  on  the  Mexican 
frontier,  past  Tucson  and  Phoenix  to  Needles,  at  the  California  line." 

Ransome  might  have  added  that  this  territory  is  lower,  has  been 
generally  stripped  by  erosion  of  the  Paleozoic  sediments  that  once  cov- 
ered it,  and  is  characterized  by  a  vegetation  more  emphatically  desert- 
like  than  that  of  the  mountain  region.  The  giant  cactus,  the  creosote 
bush,  the  cholla,  the  barrel  cactus,  the  palo  verde  and  similar  weird  and 
strange  plants  are  found  everywhere.  Familiar  vegetation  has  almost 
vanished,  and  the  average  white  man  feels  himself  to  be  in  a  strange  land. 

The  striking  feature  of  desert  topography — and  this  is  true  of  the 
mountain  region  to  almost  the  same  extent — is  the  interminable  talus 
slopes,  made  up  of  rock  fragments  that  have  cracked  off  the  fault  blocks 
or  volcanic  piles  which  form  the  projecting  heights  and^been  carried  into 
the  lowlands  by  the  gushes  of  water  from  occasional  cloudbursts. 
Geologists  have  given  considerable  study  to  this  phenomenon.  It  is  a 
mistake  to  suppose  that  sedimentary  beds  are  necessarily  deposited  in 
water.  Desert  regions  generally  are  areas  of  deposition,  and  the  streams 
are  too  feeble  to  carry  onward  all  the  debris  that  is  offered  them.  Some- 
times there  are  no  permanent  streams  at  all;  many  desert  regions  are 
enclosed  basins  with  no  outlet  to  the  sea. 

In  both  mountain  and  desert  belts  in  Arizona,  faults  of  recent  geologic 
age  have  often  formed  lakes  by  interrupting  the  flow  of  streams.  These 
lakes  have  been  filled  up  in  all  cases,  I  believe,  and  the  streams  have 
surmounted  or  cut  through  the  obstruction  and  resumed  their  erosion. 
The  Roosevelt  dam  is  merely  the  artificial  replacement  of  a  natural  dam 
which  had  been  thus  cut  through;  and  the  new  lake  fills  merely  a  part 
of  an  old  one.  In  some  of  the  depressions,  the  talus  accumulations  are 
surprisingly  deep,  attributable,  no  doubt,  to  recent  faulting.  The 
Miami  Copper  Co.  drilled  a  hole  2000  ft.  deep  into  the  so-called  Gila 
conglomerate,  merely  a  talus  accumulation  of  Quaternary  age,  without 
reaching  the  bottom.  This  depression  is  thus  much  deeper  than  any 
present  channel  of  erosion,  and  indicates  a  great  change  of  level  in  the 
geological  yesterday. 

Here  again  is  a  fact,  seemingly  irrelevant  to  our  main  subject,  but 


THE  SOUTHWEST  COPPER  FIELD  197 

really  important.  These  great  accumulations  of  talus,  or  wash,  occupy 
the  larger  part  of  the  area  both  of  the  mountain  and  desert  regions. 
The  loosely  compacted  mass  of  angular  and  subangular  fragments  con- 
tains at  every  level  abundant  pore  space,  which  enables  it  to  fill  an  ex- 
ceedingly valuable  role  in  the  conservation  of  the  water  supply.  The 
occasional  heavy  rains  pour  floods  from  the  mountains,  which  spread 
out  over  the  talus  slopes  and  playas.  A  large  part  sinks  readily  through 
the  porous  mass  and  reaches  a  level  where  its  flow  is  impeded  and  often 
permanently  stopped  by  barriers  on  the  underlying  rock  surface.  At  the 
same  time,  this  water  is  effectively  protected  from  evaporation,  and  the 
lower  portion  of  the  accumulations  is  a  succession  of  reservoirs  of 
good  water,  which  is  utilized  for  mining,  milling,  and  smelting  plants 
as  well  as  for  towns,  agriculture,  and  railroads.  Thus  the  Gila  con- 
glomerate at  Miami,  already  mentioned,  furnishes  water  for  the  Miami 
and  Inspiration  mining  companies.  Part  of  the  supply  comes  from  the 
Old  Dominion  mine,  the  workings  of  which  extend  out  under  the  con- 
glomerate, and  as  a  consequence  are  undesirably  wet;  but  the  heavy 
pumping  consequently  made  necessary  does  not  go  entirely  uncompen- 
sated,  for  the  water  is  transferred  to  the  Miami  for  use  in  that  company's 
plants.  The  mines  and  town  of  Ajo  are  absolutely  dependent  on  such 
a  supply,  as  well  as  the  large  towns  of  Douglas  and  Tucson,  with  the 
various  industries  that  support  them.  Many  a  valley  is  dotted  with 
ranches  which  would  not  be  there  except  for  these  talus  reservoirs. 

In  still  another  respect  this  feature  promotes  human  occupation.  If 
erosion  were  in  control  of  the  surface  of  such  a  region,  its  fault-block 
mountains  would  be  rough  surfaces  of  hard  rock,  trenched  with  tortuous 
ravines  and  deep  canyons,  destitute  of  soil,  and,  in  the  long  droughts, 
ten  times  more  parched  and  unwatered  than  they  actually  are.  As  a 
matter  of  fact,  the  depressions  are  pretty  well  filled  up  in  long  gentle 
slopes,  which  support  vast  areas  of  good  soil,  besides  rendering  the  country 
infinitely  more  accessible  than  it  otherwise  would  be.  The  railroads 
are  not  forced  to  follow  crooked  canyons  cut  in  hard  rock,  but  are  able 
to  dodge  around  the  ends  of  the  detached  mountain  uplifts  and  traverse 
the  country  in  fairly  straight  courses  and  easy  grades  over  the  desert- 
made  talus. 

In  many  places  the  upper,  and,  possibly,  the  lower  portions  of  the 
wash  are  hardened  by  a  lime  cement,  the  exact  origin  of  which  is  not 
exactly  clear  to  me.  Perhaps  it  is  lime  derived  from  the  weathering 
of  the  feldspars  in  the  granitic  or  volcanic  detritus  and  spread  over  the 
surface  by  the  flow  of  water  after  the  heavy  but  intermittent  rains, 
the  lime  taken  into  solution  being  precipitated  by  evaporation  or  by 
some  other  cause  before  it  has  traveled  far,  the  flow  of  water  not  being 
abundant  or  persistent  enough  to  carry  it  into  a  permanent  stream  and 
thus  out  of  the  country.  However  this  may  be,  the  process  has  evidently 


198  THE  COST  OF  MINING 

a  considerable  effect  on  the  topography  of  the  wash  in  those  extensive 
areas  which  are  now  being  eroded  instead  of  being  built  up.  Tracts 
hardened  by  caliche  are  more  resistant  and  tand  to  stand  out  in  the  form 
of  low  ridges,  domes,  or  mesas.  The  caliche  supports  a  rather  scanty 
soil  except  in  places  favorable  for  the  accumulation  of  dust.  Wherever 
this  caliche  is  exposed  and  strewn  over  the  surface — for  instance,  in 
grading  for  streets  and  houses — it  presents  the  forlorn  and  desolate 
appearance  of  old  mortar. 

Population  and  Ethnology. — I  have  already  remarked  that  Arizona 
is  geographically  somewhat  like  Spain  and  Morocco,  more  particularly 
the  latter.  The  configuration  of  the  land  is  different  in  some  respects, 
but  the  effect  of  the  sun,  the  ocean,  and  the  major  air  currents  seems  to  be 
almost  exactly  the  same.  This  similarity  is  expressed  to  the  eye  in  a 
resemblance  of  landscape,  vegetation  and  even  in  human  life  and  arts. 
The  northern  strip  of  Africa  is  a  frontier  for  dark-skinned  races,  which 
fill  the  tropical  regions  of  the  south.  The  white  races  of  Europe  have 
at  intervals  for  thousands  of  years  attempted  to  establish  themselves 
on  this  border,  but  with  no  lasting  success.  The  dark-skinned  popula- 
tion has  always  swallowed  up  the  white  immigrants,  or  invaders.  At 
times  the  races  of  Africa  have  been  superior  in  arts  and  organization 
to  the  Europeans  and  have  surged  over  and  occupied  the  Mediterranean 
islands  and  the  tips  of  the  Spanish  and  Italian  peninsulas,  to  be  expelled 
again,  leaving  only  minor  after-effects  on  the  population. 

The  copper  fields  of  Arizona  are  in  just  such  an  ethnographic  border- 
land. To  the  south  is  the  dark-skinned  Mexican  race,  upon  which  the 
Spaniards  impressed  their  language  and  some  of  their  arts,  but  not 
their  color  or  their  racial  characteristics.  To  the  north,  in  the  colder 
plateaus,  the  white-American  stock  is  rapidly  swamping  all  racial  com- 
petition and  the  Indian  and  Mexican  population  is  already  reduced  to 
isolated  fragments  which  have  progressively  less  and  less  influence  on  their 
white  neighbors.  In  the  mountain  and  desert  regions  there  is  a  racial 
deadlock.  The  organizing,  industrial,  and  developing  impulse  comes 
from  the  white  invaders,  but  there  is  no  assurance  that  they  will  ever 
overwhelm  the  natives  with  their  numbers. 

The  Mexicans  resist  absorption  in  a  variety  of  ways.  Though  most 
of  them  speak  or  understand  English,  it  is  not  their  familiar  tongue. 
Even  in  the  schools,  where  all  the  teaching  is  in  English,  the  Mexican 
children  set  themselves  apart  from  the  white  children  and  immediately 
fall  into  Spanish.  This  language  is  invariably  spoken  in  the  household, 
even  by  those  Mexicans  who  speak  English  so  perfectly  that  one  might 
imagine  they  knew  no  other  tongue.  This  difference  of  language,  added 
to  difference  of  color,  helps  to  perpetuate  difference  in  habit  and  point 
of  view;  and  all  these  things  tend  to  restrain  social  intercourse  between 
the  two  races.  Industrially,  the  inhabitants  of  the  region  are  not  on  the 


THE  SOUTHWEST  COPPER  FIELD  199 

same  level.  The  Mexicans  do  not  produce  anything  like  the  same  number 
of  business  leaders,  professional  men,  engineers,  or  trained  mechanics. 
They  are,  therefore,  less  highly  organized,  and  their  group  efficiency 
is  far  lower;  for  it  is  group  efficiency  that  promotes  productivity. 

American  and  Mexican  Methods. — The  difference  between  the 
Mexicans  and  the  whites  in  this  respect  is  generally  expressed  in  a  difference 
of  wages.  When  such  a  difference  is  imposed  upon  individuals  who  do 
the  same  work  as  white  men  there  is  an  apparent  injustice  which  leads 
to  dissatisfaction.  I  would  not  like  to  try  to  arbitrate  the  difficulties  which 
arise  under  such  a  state  of  affairs.  A  thousand  Americans  in  a  mine 
may  produce  twice  as  much  from  it  as  a  thousand  Mexicans,  yet  each 
American  shoveler  may  not  load  any  more  cars  than  each  Mexican 
shoveler.  If  the  American  shoveler  is  paid  twice  as  much  as  the  Mexican 
shoveler  receives,  the  latter  is  not  likely  to  see  the  justice  of  it.  I  can 
see  no  line  of  argument  that  seems  likely  to  convince  him;  the  question 
is  too  abstruse. 

I  am  satisfied,  however,  that  the  laws  of  trade  will  inevitably  impose 
a  difference  of  wages.  A  mining  organization  of  a  thousand  men,  all 
Mexicans  from  the  directors  to  the  mule  drivers,  would  almost  certianly 
involve  itself  in  mistakes  of  organization  and  engineering.  I  should 
expect  that  a  white  organization  of  the  same  number  would  avoid  enough 
of  those  mistakes  to  enable  it  to  produce  twice  as  much  ore  with  no 
greater  effort.  The  result,  in  a  competitive  business,  is  bound  to  be  the 
defeat  and  destruction  of  the  Mexican  organization.  Only  one  thing 
can  save  it,  and  that  is  a  willingness  on  the  part  of  its  members  to  accept 
low  enough  wages  to  allow  the  product  to  be  sold  at  the  price  their 
competitor  is  willing  to  accept. 

The  actuality,  so  far  as  the  mines  are  concerned,  is  a  compromise. 
The  Mexicans  do  not  complete  with  the  whites  in  finance,  organization, 
management,  or  engineering;  probably  avoiding  thereby  the  severe 
consequences  of  defeat.  They  do  furnish  a  large  part  of  the  common 
labor;  and  the  laborers,  though  not  paid  as  much  as  white  men,  do 
undoubtedly  reap  some  benefit  from  the  organizing  ability  of  the  whites, 
because  they  get  much  higher  wages  than  when  they  work  under  Mexican 
employers.  In  some  places  they  are  paid  the  same  as  white  men. 

It  is  easy  to  see,  on  the  other  hand,  how  the  Anglo-Saxon  imagination 
has  been  impressed  by  the  sight  of  a  Mediterranean  civilization  in  an 
environment  that  is  natural  to  it.  Both  the  Spaniards  and  the  Moors 
inherited  much  from  the  Romans,  Phoenicians,  and  the  predecessors 
of  those  peoples.  Their  architecture  and  their  agriculture  were  developed 
to  combat  a  blazing  sun  and  long  droughts.  The  word  "rival"  is  a 
reminiscence  of  ancients  quarrels  over  water  rights.  The  fig,  the  olive, 
the  orange,  the  date,  and  the  grape  are  natural  neighbors  of  the  live  oak, 
the  yucca,  the  cactus,  and  the  creosote  bush.  The  massive  walls  of 


200  THE  COST  OF  MINING 

stone  or  mud,  covered  with  stucco;  the  flat  roofs,  inner  courts  and  gardens 
protected  from  wind  and  dust;  the  heavy  porticos,  or  portales,  refuges 
from  the  fierce  sun — all  are  so  natural  under  such  an  environment  that 
they  seem  inevitable.  Several  different  races  have  invented  them  in- 
dependently. The  architecture  of  the  Pueblos  and  Aztecs  bears  a 
strong  resemblance  both  in  form  and  material  to  that  of  Morocco,  Sicily, 
Syria,  and  Persia. 

The  Americans  have  brought  with  them  an  architecture  inherited 
from  the  rainy  climate  of  northern  Europe  and  the  eastern  United  States; 
steep  roofs  to  shed  the  rain,  many  windows  to  make  the  most  of  the  scanty 
light,  spreading  lawns  and  stately  trees  outside  the  house  to  serve  as 
grateful  reminders  of  aboriginal  meadows  and  forests.  They  have 
brought,  also,  many  appliances  for  heating,  lighting,  cooking  and  com- 
munication— products  of  their  mechanical  skill  which  are  useful  every- 
where. But  in  many  respects  the  north  European  forms  do  not  fit 
in  with  the  southwestern  environment,  and  they  are  being  rapidly 
modified  under  the  guidance  of  experience,  and  with  the  growth  of  wealth, 
education,  and  good  taste,  to  conform  with  standards  which  long  human 
use  has  shown  to  be  appropriate.  In  other  words,  the  Yankees  are 
earning  much  from  the  Mexicans. 


CHAPTER  XIII 

JEROME  AND  THE  PRE-CAMBRIAN 

DESCRIPTION    OF   JEROME,  ARIZONA — SUGGESTION  OF  GEOLOGIC  HISTORY — UNCON- 
FORMITIES— THE  ALGONKIAN  OR  BELT  SERIES  IN  THE  WEST — PARALLELS  OF  THE 

PRESENT   DAY PROBABLE    ORIGIN   OF   JEROME   DEPOSITS  DURING  OROGRAPHIC 

REVOLUTION  AT  THE  END  OF  ALGONKIAN  TIME PARALLEL  IN  LAKE  SUPERIOR 

— STRUCTURE  OF  JEROME  DEPOSITS — THE  UNITED  VERDE — THE  UNITED  VERDE 
EXTENSION — ECONOMIC  VALUE  OF  PRE-CAMBRIAN  LAND  SURFACE — OUTPUT  AND 

PROFITS     OF     MINES THEIR    FUTURE DISCUSSION    OF    DEVONIAN    GEOGRAPHY 

ITS  BEARING  ON  THE  MINES  OF  THE  MAYER  DISTRICT.  EROSION  OF  A  DOME 
DURING  POST  PERMIAN  TIMES — THE  MAYER  MINES — REMARKS  ON  THE  ENGI- 
NEERING OF  PROSPECTS. 

Jerome  is  one  of  the  most  spectacular  places  in  the  United  States. 
When  an  automobile  road  has  been  built  direct  from  Prescott,  it  will  be 
only  31  miles  from  that  town.  On  that  highway  the  tourist  will  come 
upon  the  Verde  Valley  first  over  the  flank  of  Mount  Mingus,  and  will 
find  himself  looking  down  over  an  escarpment  4500  ft.  high.  The  picture 
will  give  him  a  thrill.  Even  after  months  of  looking  at  it,  much  is  found 
that  has  previously  escaped  notice.  It  is  more  than  a  scene  of  relief 
and  color;  it  is  a  vast  exposure  of  present-day  geological  processes,  vol- 
canoes, and  erosion,  and  of  important  geological  facts  reaching  back  to 
the  earliest  recorded  ages.  By  collating  all  these  features,  one  finds  that 
the  panorama  builds  up  an  interest  even  exceeding  that  of  the  Grand 
Canyon.  Fifteen  or  twenty  miles  away,  straight  in  front  across  the 
valley,  is  the  same  great  mass  of  colored  strata  that  appears  in  the  Can- 
yon, but  here  forming  only  the  front  of  the  great  plateau.  On  the  sum- 
mit 60  miles  away,  are  the  San  Francisco  peaks,  looking  like  Mount 
Shasta.  In  the  bottom  of  the  valley  are  glimpses  of  the  river,  amidst 
clouds  of  smoke  from  two  great  smeltery  stacks,  which,  at  this  distance, 
look  like  pipestems. 

In  the  discussion  of  this  district,  I  am  venturing  to  explore  some  of  the 
dim  realms  of  geological  speculation  which  mining  engineers  usually 
avoid.  I  would  have  no  desire  to  do  this  if  there  were  not  reason,  more 
or  less  vague  and  hardly  capable  of  clear  expression,  for  thinking  that 
these  speculations  follow  a  line  which  may  lead  to  practical  results. 

No  longer  can  there  be  any  doubt  that  the  study  of  ore  deposits,  from 
the  point  of  view  of  pure  science,  has  become  part  of  the  essential  equip- 
ment of  a  mining  man.  Secondary  enrichment,  the  magmatic  origin  of 
ore  deposits,  the  effects  of  contact  and  regional  metamorphism,  the  indi- 

201 


202  THE  COST  OF  MINING 

cations  of  such  action  in  rock  alteration,  and  many  similar  things  are 
absorbed  by  hosts  of  men  who  have  never  consciously  studied  geology. 
It  is  far  from  impossible  that  a  study  of  the  history  of  earlier  continental 
geography  may  lead  to  further  knowledge  of  the  areas  of  mineralization. 

Familiarity  Often  Breeds  Misunderstanding. — Nothing  is  more  com- 
mon than  for  people  to  assume  that  they  understand  things  because  they 
see  them  often.  A  view  of  the  moon  through  a  good  telescope  is,  to  the 
average  man,  an  astounding  revelation — all  the  more  so.  the  greater 
the  man's  intelligence — although  nearly  everybody  sees  the  moon  every 
month,  and  the  average  man  has  read  of  it  and  has  a  fair  idea  of  what  it  is. 
There  is  nothing  difficult  about  it.  He  may  see  the  moon  as  plainly  as 
he  can  see  the  house  across  the  street:  mountains  and  plains,  bright 
sunlight  and  impenetrable  shadow;  lofty  mountain  pinnacles  whose 
summits  are  aglow  with  the  rising  sun;  a  clear  view  of  a  sphere,  not  a  flat 
disk — a  huge  object  with  an  area  greater  than  the  United  States  and  all 
its  outliers.  But  did  he  realize  it?  He  will  probably  have  to  confess 
that  he  did  not.  But,  once  he  does,  he  will  have  no  doubt  that  it  is  worth 
while,  although  the  knowledge  will  never  bring  him  a  cent.  Similarly, 
how  many  stop  to  realize  that  the  unconformable  parting  of  two  rock 
formations  is  a  record  of  great  events  and  changes?  That  dividing  plane 
is,  at  once,  the  surface  of  an  ancient  continent  and  the  floor  of  an  ancient 
sea.  The  fact  is  perfectly  intelligible;  it  requires  no  extraordinary  effort 
of  the  imagination.  The  only  obstacle  to  overcome  is  the  habit  of  not 
observing  and  thinking  about  such  things. 

Geologic  Unconformities  at  Jerome. — One  of  these  unconformities  is 
so  conspicuous  at  Jerome  that  it  serves  as  a  starting  point  for  the  mining 
operations.  The  miners  in  half  the  district  are  exploring,  not  the  present 
land  surface,  but  the  surface  of  a  continent  that  was  buried  many  millions 
of  years  ago.  In  a  way,  it  is  part  of  another  world;  not  wholly  inaccess- 
ible, like  the  moon,  but  probably  less  understood.  Fragments  of  the 
pre-Cambrian  surface  are  exposed  at  different  places,  but  rarely  more  than 
its  edges  are  brought  to  light.  It  is  just  as  important  to  realize  that  this 
old  surface  may  be  destroyed  by  deep  erosion,  so  that  its  most  valuable 
and  interesting  features  are  lost,  as  it  is  to  realize  that  the  larger  part  of  it 
is  inaccessible  because  it  is  buried;  more  so,  in  fact,  because  there  is  a 
chance  that  part  of  the  buried  portion  may  be  exhumed.  In  these 
tattered  edges  of  the  old  continent  are  many  valuable  ore  deposits — the 
iron  mines  of  Michigan  and  Minnesota,  the  zinc  mines  of  New  Jersey,  the 
old  iron  mines  of  Southeast  Missouri,  the  gold  mines  of  the  Black  Hills, 
and,  no  doubt,  many  others.  Exploration,  groping  along  this  old  surface, 
prompted  by  geological  speculation,  led  to  the  discovery  of  the  wonder- 
ful copper  bonanza  of  the  United  Verde  Extension.  This  single  incident 
justifies  a  lot  of  speculation. 

Of  course,  there  is  no  profit  in  letting  one's  imagination  run  riot, 


JEROME  AND  THE  PRE-CAMBRIAN  203 

creating  pictures  which  are  nothing  but  dreams.  It  is,  however,  possible 
to  use  the  imagination  as  a  searchlight  to  explore  the  dark  world  of 
possibility.  In  that  way  it  may  lead  to  many  a  solid  fact. 

Study  of  the  mines  of  Jerome  reveals  a  setting  of  impressive  facts 
which  point  the  way  to  some  equally  impressive  conjectures. 

1.  The  ore  deposits  were  developed  (geologically)  into  their  present 
condition  during  the  erosion  of  a  continental  area.     This  period  of  erosion 
continued  for  an  exceptionally  long  period,  speaking  even  of  geologic 
time,  for  it  resulted  in  wearing  the  continent  down  to  a  nearly  level  plain 
(peneplain),  which  was  finally  submerged  slowly  and  quietly  by  an  inva- 
sion of  the  sea.     This  submergence  persisted  during  long  ages  of  Palae- 
ozoic time  with  no  greater  disturbance  than  occasional  gentle  oscillations, 
of  level.     The  period  of  erosion  had  followed  a  period  of  mountain  build- 
ing which  was,  in  all  probability,  exceptionally  severe  and  widespread 
and  was  accompanied  by  volcanic  or  batholithic  action  on  a  grand  scale. 
It  appears,  then,  that  the  period  of  erosion,  as  well  as  the  succeeding  era 
of  deposition  during  Palaeozoic  time,  represents  a  long  epoch  of  quiescence 
and^extremely  slow  differential  subsidence,  following  a  period  of  disturb- 
ance during  which  the  mountain-building  forces  in  this  part  of  the  world 
had  exhausted  themselves. 

2.  The  ore  deposits  are  a  part,  or  result,  of  almost  the  latest  pre- 
Cambrian  igneous  action  to  be  seen.     The  rock  masses  most  intimately 
associated  with  them  are  not  highly  metamorphosed  or  disturbed;  they 
are  markedly  less  so  than  any  of  the  older-pre-Cambrian  rocks  which 
occur  in  the  neighborhood. 

3.  Neither  the  ore  deposits  nor  the  rocks  in  which  they  occur  differ  in 
any  essential  respect  (unless  age  is  an  essential)  from  deposits  in  nearby 
districts  which  were  formed  during  the  later  mountain-building  periods 
that  brought  to  an  end  the  long-continued  submergence,  sea  invasion 
and  marine  deposition  of  Palaeozoic,  and  again  of  Mesozoic,  time. 

4.  The  period  of  deposition  which  immediately  preceded  the  pre- 
Cambrian  continental  uplift  was  an  active  and  extensive   one.     It  is 
represented   by  the  Belt   series   of  rocks,   which   are  thick  masses  of 
sandstones  or  quartzites  or  conglomerates,  shales  and  limestones — all 
prevailing  ripple-marked   or  sun-cracked,  and  containing  some   sparse 
remains  of  animal  life  thought  to  be  chiefly  fresh-water  forms.     At  any 
rate,  the  evidence  is  positive  that  most  of  the  Belt  rocks  were  formed 
either  on  land  surfaces  or  in  shallow  water,  and  were  probably  piled  up 
in  river  deltas,  playas,  lakes,  estuaries,  and  perhaps  shallow  arms  of  the 
sea  or  tide  flats. 

Characteristics  of  Belt  Rocks. — These  Belt  rocks  were  tilted,  faulted, 
folded  and  metamorphosed  during  the  latest  great  pre-Cambrian  conti- 
nental uplift,  but  they  were  not  generally  distorted  or  metamorphosed 
to  anything  like  the  extent  to  which  still  earlier  rocks  had  been.  In  fact, 


204  THE  COST  OF  MINING 

they  are  found  to  lie  upon  them  in  positions  of  nonconformity  as  abrupt 
as  that  which  separates  them  from  the  succeeding  Palaeozoic  rocks. 
Some  of  these  still  older  rocks  are  also,  without  doubt,  sedimentary;  that 
is  to  say,  they  were  once  sands  or  muds.  The  separation  between  the 
Belt  rocks  and  the  still  earlier  ones  therefore  took  place  during  a  prior 
period  of  continental  uplift,  mountain  building,  and  erosion  which  had 
followed  upon  an  even  more  primitive  age  of  quiescence,  subsidence  and 
deposition. 

The  Belt  rocks  are  thus  so  characteristic  that  they  may  be  recognized 
with  fair  certainty  wherever  they  are  well  exposed.  They  are  found 
in  large  patches,  some  of  them  areas  of  thousands  of  square  miles,  ex- 
tending from  not  far  north  of  Roosevelt  Dam,  in  Arizona,  to  central 
British  Columbia,  northwest  of  Banff — a  distance  of  1300  miles  north 
and  south,  and  within  a  strip  about  500  miles  wide  east  and  west.  Jerome 
lies  about  100  miles  northwest  of  large  exposures  described  by  Ransome 
in  the  Tonto  Basin  and  about  75  miles  slightly  east  of  south  of  other  large 
ones  in  the  bottom  of  the  Grand  Canyon.  About  200  miles  northeast 
of  the  latter  are  large  exposures  in  the  Needle  Mountains,  in  southwestern 
Colorado;  200  miles  northwest  of  the  Needle  Mountains,  across  vast 
masses  of  later  sediments,  are  found  similar  great  exposures  in  the 
Wasatch  Mountains  of  Utah;  75  miles  further  northwest,  they  occur 
along  the  Bear  River,  in  Utah;  and  225  miles  further  north  begin  the 
great  areas  of  Belt  rocks  in  western  Montana,  which  extend  thence  far 
northwesterly  through  the  Cceur  d'Alene  region  of  Idaho  into  British 
Columbia.  Due  west  of  Jerome  in  the  Inyo  Mountains  of  California 
are  further  exposures. 

Deductions  from  Acknowledged  Facts. — I  have  recited  these  facts 
in  order  to  show  the  broad  basis  for  the  following  conjectures,  which 
appear  to  me  to  be  reasonable : 

1.  The  Belt  formation  is  the  filling  of  a  great  epicontinental  depres- 
sion or  trough  which  was  either  filled  as  fast  as  it  sank  or  sank  because  it  was 
filled,  so  that  during  the  whole  process  its  surface  was  fairly  level  and  low. 
One  cannot  be  sure,  of  course,  that  there  were  not  two  or  several  basins 
with  interruptions  between;  but  even  if  so,  the  conditions  in  all  were 
substantially  the  same.  This  parallelism  of  conditions  over  so  wide  an 
area  could  have  been  induced  only  by  a  dominant  influence  sufficiently 
potent  to  dwarf  local  influences.  It  is  noticeable  that  the  Belt  rocks 
contain  stupendous  quantities  of  fine  sands,  grading  in  fineness  down  to 
true  silts,  and  alternating.  Coarse  pebbly  sands,  to  say  nothing  of  heavy 
conglomerates,  are  rare.  It  is,  therefore,  plain  that  these  materials 
must  have  been  transported  far  enough  to  break  up  effectually  all  the 
coarser  products  of  erosion;  but  at  the  same  time  the  detritus  was  de- 
livered into  the  settling  area  constantly  and  in  great  volume. 

It  seems  to  me  that  such  conditions  of  combined  uniformity  and 


JEROME  AND  THE  PRE-CAMBRIAN  205 

volume  over  such  extended  areas  must  indicate  the  neighborhood  of  a 
great  mountain  chain,  or  at  least  an  extensive  belt  of  highlands  on  one 
side  or  both  sides  of  the  trough.  It  is  not  necessary  to  call  upon  a  direct 
effort  of  imagination  to  find  an  explanation;  the  geography  of  the  present 
day  offers  a  number  of  examples  from  which  to  choose. 

The  great  uplift  of  the  Himalayas  is  bordered  on  both  sides  by  similar 
areas  of  deposition.  On  the  south  side  is  the  Ganges  flood  plain,  covering 
300,000  square  miles,  in  which  recent  sediments  borne  by  the  Ganges  and 
Brahmaputra  are  known  to  be  over  2000  ft.  deep  and  may  continue 
to  accumulate  in  the  future  almost  without  limit  and  without  pronounced 
change  in  their  character.  The  vast  plains  bordering  the  Sea  of  Aral  are 
a  similar  field,  being  filled  with  detritus  brought  down  by  the  Oxus  and 
the  Jaxartes,  and  with  dust  and  sand  swept  in  by  desert  winds. 

Parallel  Instances  in  North  America. — Or  one  may  turn  to  North 
America  to  find  several  other  examples;  namely,  the  Gulf  of  California, 
the  upper  end  of  which  has  already  been  filled  across  by  the  detritus  of  the 
Colorado  River,  so  that  its  northern  extension  has  been  cut  off  and  the 
water  there  has  evaporated,  leaving  a  large  area  below  sea  level.  This 
trough  is  800  miles  long,  100  to  150  miles  wide  and  is  receiving  sands  and 
silts  of  both  rivers  and  winds  from  a  vast  area  of  erosion.  The  valley  of 
California,  400  miles  long  and  75  miles  wide,  between  the  Sierra  Nevada 
and  the  Coast  Range  is  being  filled  with  detritus  of  the  same  nature, 
already  known  to  be  over  2000  ft.  deep,  and  is  sinking  as  it  fills. 

Still  another  example,  on  a  scale  and  of  a  nature  sufficient  to  make  a 
parallel  with  the  Belt  rocks,  is  the  great  coastal  plain  of  north  America 
beginning  at  Long  Island  and  extending  along  the  coast  through  Georgia 
Florida,  Louisiana,  and  Texas  into  eastern  Mexico — a  distance  along  a 
gently  curved  line  of  fully  2000  miles,  with  a  width  up  to  500  miles,  and 
receiving  the  detritus  of  all  the  rivers  on  both  sides  of  the  Appalachian 
Mountains,  and  from  the  Rocky  Mountain  uplift  for  2000  miles,  from 
Tampico  to  Alberta.  It  receives  the  sands  migrating  down  the  Missouri 
and  the  Arkansas,  the  Rio  Grande,  the  Nueces,  the  Guadalupe,  the 
Brazos,  the  Red  River,  the  Mississippi,  the  Ohio,  the  Alabama,  the  Flint 
the  Savannah,  the  Potomac,  the  Susquehanna,  and  the  Hudson — 513,000- 
000  tons  a  year  of  sand  and  mud,  besides  270,000,000  tons  of  salts 
in  solution.  This  whole  coast  is  an  interminable  stretch  of  fine  sands, 
assorted  by  waves  and  shore  currents,  piled  up  on  the  shore  in  dunes 
This  mass  has  been  accumulating  and  slowly  shifting  without  striking 
interruption  since  the  beginning  of  Upper  Cretaceous  times,  and  no  one 
knows  how  deep  it  is. 

At  any  rate,  the  Belt  rocks  represent  some  such  scale  of  grand  con- 
tinental features,  great  mountains  and  great  rivers,  debouching  upon  a 
huge  subsiding  basin  or  slope  for  ages  under  conditions  generally  as 
and  stable  as  those  on  our  Gulf  Coast  today.  In  this^great  basin  there 


206  THE  COST  OF  MINING 

was  little  volcanic  activity.  It  is  probable  that  there  was  some,  but  it 
certainly  was  hardly  more  prominent  than  it  has  been  along  the  coastal 
plan — no  greater  than  that  in  the  valley  of  California  in  recent  times. 

Volcanic  Activity  Follows  Period  of  Slight  Action. — When  this  cycle 
of  deposition  came  to  an  end,  however,  there  was  an  outburst  of  moun- 
tain-building energy  on  a  great  scale,  accompanied  by  volcanic  activity 
and  batholithic  action.  Before  this  ended,  the  Belt  rocks  were  hardened, 
tilted  and  folded,  and  finally  subjected  to  erosion  so  widespread  and  long 
continued  that  the  enormous  accumulations  of  rock  were  wholly  swept 
away  over  large  areas,  until  they  remained  only  in  depressed  tracts  or 
synclines;  such,  for  instance,  as  one  found  in  the  bottom  of  the  Grand 
Canyon,  where  sediments  not  less  than  12,000  ft.  thick  are  found  as  a 
mere  remnant  protected  from  the  general  destruction  through  having 
been  squeezed  into  a  trough  that  extended  below  the  level  of  effective 
attack.  At  the  tops  of  these  troughs  the  tilted  beds  of  quartzite  often 
project  some  distance  into  the  overlying  rocks,  showing  that  before  the 
erosion  had  been  completed  they  had  become  harder  and  more  resistant 
than  the  neighboring  granites  and  schists,  and  had  formed  low  hills 
and  ridges  in  the  rolling  plain  which  was  the  expression  at  once  of  a  worn- 
down  continent  and  of  a  cycle  of  recurrent  geological  agencies. 

Theories  of  Formation  of  Jerome  Deposits, — From  this  assemblage 
of  fact  and  inference,  I  believe  it  is  possible  to  make  an  intelligent  con- 
jecture that  the  ore  deposits  of  Jerome  were  formed  from  igneous  action 
which  accompanied  the  uplift  and  mountain  building  that  occurred  at  the 
end  of  the  Belt  period  of  deposition.  The  diorites  of  Jerome  in  which,  or 
along  which,  the  orebodies  occur  are  comparatively  fresh  and  massive. 
This  fact  is  marked  enough  to  make  it  seem  certain  that  they  had  not 
participated  in  the  metamorphism,  deformation  and  erosion  of  the  conti- 
nent that  preceded  the  Belt  rocks.  The  fact  that  the  Belt  formations 
contain  practically  no  interbedded  volcanic  material,  both  in  general  and 
in  the  areas  nearest  Jerome  in  particular,  is  good  and  almost  positive 
evidence  that  this  extensive  igneous  activity  did  not  take  place  during 
the  period  of  Belt  deposition.  It  is  possible,  therefore,  to  come  naturally 
to  the  conclusion  that  the  Jerome  rocks  appeared  during  the  uplift  which 
brought  the  Belt  period  to  an  end.  Under  this  assumption,  I  can  see  no 
difficulty  whatever  in  picturing  the  succession  of  events.  As  was  the 
condition  with  the  Belt  rocks,  the  Jerome  intrusives  suffered  the  long- 
continued  erosion  and  oxidation  which  continued  in  the  mountains  of 
the  post-Beltian  and  pre-Cambrian  continent.  Like  the  Belt  quartzites. 
they  finally  projected  as  low  hills,  covered  with  reddish  soil — hills  so  low 
that  they  would  have  attracted  little  attention  in  the  slightly  rolling 
landscape. 

There  are  no  Belt  rocks  at  Jerome  and  none  are  known  nearer  to  it 
than  the  Grand  Canyon.  These  supposed  relations  between  the  Jerome 


JEROME  AND  THE  PRE-CAMBRIAN  207 

ore  deposits  and  the  disturbances  which  ensued  upon  the  termination  of 
the  Belt  period  of  deposition  are  not  based,  therefore,  upon  direct  evidence 
but  rest  upon  conjecture,  or,  to  call  it  by  a  more  dignified  name,  upon  a 
process  of  reasoning.  But  it  diminishes  the  scope  for  guesswork,  and  adds 
something  to  the  probability  of  my  conjecture,  to  find  that  in  the  bottom 
of  the  Grand  Canyon  there  are  copper  deposits  which  have  precisely  the 
broad  geological  relations  which  I  have  pictured  for  those  of  Jerome. 
L.  F.  Noble  describes  these  deposits  as  fissure  veins  which  cut  across 
both  the  Unkar  Group  (Algonkian  or  Belt)  and  the  underlying  Vishnu 
schists  (Archaean).  To  be  specific,  the  facts  are  as  follows; 

1.  The  Unkar  group  contains  great  intrusions  of  diabase,  similar, 
no  doubt,  to  some  of  the  rocks  at  Jerome.  The  copper-bearing  veins  are 
fault  fissures  cutting  the  Unkar  rocks  but  terminating  at  the  overlying 
basal  sandstone  of  the  Cambrian.  Speaking  of  these  deposits,  and  of  the 
conditions  of  formation,  Noble  says; 

All  the  other  deposits  in  the  Archaean  and  Algonkian  rock  occur  either  in 
similar  fissure  veins,  which  represent  the  mineralized  fault  planes  of  normal  Al- 
gonkian faults  or  in  the  zone  of  shattering  along  the  line  of  the  Al- 
gonkian displacement  of  the  West  Kaibab  fault.  All  the  faults  belong  to  the 
same  period  of  displacement,  the  one  in  which  the  great  mountain-making  move- 
ment came  at  the  end  of  Algonkian  time. 

Formation  of  Jerome  Deposits  Contemporary  to  Those  of  Lake  Supe- 
rior and  Canada. — 2.  If  it  be  logical  to  regard  these  conjectures  as 
measurably  correct,  there  is  reason  to  argue  that  the  ore  deposits  of 
Jerome  may  belong  to  the  same  cycle  of  continental  history  as  the  copper 
mines  of  Lake  Superior,  the  copper-nickel  deposits  of  Sudbury,  the  silver 
deposits  of  Cobalt,  and  perhaps  the  gold  mines  of  Porcupine,  Ontario  and 
the  zinc  deposits  of  New  Jersey.  These  deposits  are  all  connected  with 
batholithic,  or  at  least  volcanic,  masses  along  a  tolerably  well-defined  axis. 
They  may  all  belong,  as  has  been  suggested  to  me  by  Prof.  C.  K.  Leith,  to 
the  same  period  of  mountain  building.  The  broad  fact,  on  which  conjec- 
ture may  be  based,  are  as  follows: 

The  Upper  Huronian,  or  Animikie,  series  of  Lake  Superior,  as  well  as 
certain  earlier  rocks  separated  from  the  Animikie  by  an  erosion  interval 
or  moderate  unconformity,  is  an  example  of  normal  sedimentation  on  an 
extensive  scale.  Following  a  long  period  of  continental  quiescence, 
during  which  erosion  forms  had  reached  mature  stages,  there  ensued  a 
slow  subsidence  and  sea  invasion.  The  first  deposits  were  sandstones  or 
conglomerates,  merely  the  washed  debris  of  land  weathering;  following 
these  were  chemical  deposits  or  precipitations  such  as  usually  take  place 
in  deepening  waters,  limestone  and  the  peculiar  iron  formations;  finally, 
deposits  made  after  the  subsidence  had  come  to  an  end,  and  erosion 
products  from  the  land  rapidly  filled  the  shallowing  basin — shales  and 
sandstones. 


208  THE  COST  OF  MINING 

Then  followed  an  outburst  of  mountain  building  or  continental  read- 
justment, during  which  certain  areas  of  the  rocks  described  were  dis- 
located and  contorted,,  just  as  rocks  have  been  dislocated  and  contorted 
along  many  mountain-building  axes  in  other  places  in  later  times.  This 
disturbance  was  accompanied  by  igneous  activity  on  a  tremendous  scale, 
producing  innumerable  batholiths  or  intrusions,  as  well  as  great  piles  of 
surface  volcanics  or  extrusions.  The  Keweenawan  series,  the  copper- 
bearing  rocks  of  Lake  Superior,  was  such  a  pile.  It  consists  of  a  succes- 
sion of  thick  lava  flows  separated  by  beds  of  coarse  erosion  products  or 
talus,  such  as  invariably  accumulate  on  mountain  slopes.  As  the  process 
went  on,  the  volcanic  activity  lost  its  vigor,  the  intervals  between  eruptions 
became  longer,  the  accumulations  of  debris  greater,  until  finally  the 
eruptions  ceased  altogether  and  the  lowlands  around  or  the  depressions 
between  the  volcanic  piles  were  swamped  in  a  huge  mass  of  talus  which 
differs  in  no  essential  respect  from  the  wash  that  fills  the  depressions 
between  the  fault  blocks  of  Arizona. 

It  seems  to  me  that  this  Keweenawan  series,  then,  is  distinctly  a 
record  of  continental  disturbance,  the  reverse  of  the  period  of  quiescence 
and  marginal  deposition  of  which  the  Huronian  is  the  record.  With 
the  closing  of  the  Keweenawan  disturbance,  the  Lake  Superior  region 
settled  into  a  state  of  crustal  quiescence  which  has  lasted  to  the  present 
day.  During  Palaeozoic  and  again  in  Cretaceous  times  it  was  quietly 
depressed,  so  that  it  received  a  partial  invasion  by  the  sea,  the  record  of 
which  is  sediment  still  undisturbed  and  almost  unconsolidated.  In 
all  its  major  aspects,  this  succession  of  events  is  on  all  fours  with  that 
recorded  for  the  Belt  series,  the  mountain-building  interval,  and  the  Palaeo- 
zoic of  central  Arizona;  and  it  is  a  fair  inference  that  the  copper  deposits 
of  Jerome  belong  to  the  same  line  in  the  geological  column  and  to  the 
same  set  of  general  causes  as  those  of  Michigan. 

Structural  Features  of  Jerome  Ore  Deposits. — A  great  deal  remains 
to  be  learned  about  the  structural  features  that  govern  the  occurrence 
of  the  deposits  in  the  Jerome  district,  but  one  salient  fact  appears  to  be 
established — the  ores  are  distributed  along  the  contacts  of  intrusive 
masses  of  an  augite  diorite.  All  the  masses  of  this  diorite  now  known  may 
easily  have  been  originally  one,  which  has  been  divided  by  faulting,  but 
this  is  not  yet  a  definitely  proved  fact.  This  diorite  is  next  to  the  young- 
est of  the  pre-Cambrian  rocks  of  the  district,  but  it  is  cut  by  a  set  of  dikes 
which  are  also  a  kind  of  diorite,  but  are  narrow.  The  orebodies  are 
younger  than  the  great  diorite  intrusions  but  older  than  the  narrow  dikes. 
The  massive  diorite,  which  may  be  designated  the  United  Verde  diorite; 
the  orebodies  and  the  narrow  dikes,  which  are  known  by  the  rather 
extraordinary  name  of  '' water  courses"  are  all  undisturbed  except  by 
recent  faulting,  and  plainly  did  not  participate  in  the  mountain-building 
stresses  which  affected  the  other  pre-Cambrian  rocks.  They  are,  however, 


JEROME  AND  THE  PRE-CAMBRIAN  209 

definitely  pre-Cambrian  in  age.  The  whole  process  of  formation  was 
completed,  the  ores  were  exposed  by  erosion,  oxidized  to  a  depth  of  500 
ft.,  the  copper  had  migrated  to  the  zone  of  secondary  enrichment,  and 
the  orebodies  brought  completely  into  their  present  condition  before  the 
invasion  of  the  Palaeozoic  sea. 

The  rocks  cut  by  the  United  Verde  diorite  are  all  ancient  volcanics, 
either  intrusive  or  extrusive.  Some  of  them  may  be  of  pre-Algonkian 
age,  on  the  theory  that  the  United  Verde  diorite  is  post-Algonkian,  be- 
cause they  have  been  subjected  to  stresses  vigorous  enough  to  give  them 
a  widespread  schistosity ;  and  I  suppose  this  must  indicate  that  these  rocks 
participated  in  mountain-building  movements  that  occurred  before  the 
Belt  rocks  were  deposited. 

Relation  of  Greenstones  and  Quartz  Porphyries, — The  oldest  rocks 
seem  to  be  prevailingly  greenstones,  many  of  which  are  undoubtedly 
extrusives,  often  in  the  form  of  bedded  tuffs,  although  a  good  many  of 
these  are  of  medium  acidity  and  have  a  gray  or  dark  color.  These 
greenstones  are  often  considerably  folded,  in  axes  running,  generally, 
north  and  south.  Into  these  greenstones  a  mass  of  quartz  porphyry  has 
been  intruded,  and  forms  the  high  ridge  called  Cleopatra  Hill,  just  south 
of  the  United  Verde  mine.  It  is  with  this  north  border  of  the  quartz 
porphyry  mass  that  the  present  article  is  chiefly  concerned,  for  the  zone 
of  mineralization  follows  it  fairly  closely. 

As  a  whole,  the  quartz  porphyry  is  a  large  irregular  mass  the  outlines 
of  which  are  vaguely  known  as  its  west  end,  but  not  at  all  toward  the  east, 
where,  beyond  a  great  fault,  it  is  generally  covered  with  Palaeozoic  lime- 
stones and  recent  lavas.  It  is  certainly  intrusive  into  the  greenstones 
and  irregular  in  outline,  probably  sending  off  several  spurs  from  the  main 
mass,  and  extends  along  an  approximately  east-and-west  course  from 
south-west  of  the  United  Verde  to  and  beyond  the  Texas  shaft,  a  dis- 
tance of  two  and  one-half  miles.  The  north  boundary  of  this  mass 
cuts  across  the  bedding  or  schistosity  of  the  greenstones  nearly  at  right 
angles  and  forms  a  rude  plane,  which  dips  generally  northward  at  an 
angle  of  perhaps  60°.  It  is  a  notable  fact  that  this  prophyry,  which  in  its 
center  approaches  a  granite  in  texture,  has  been  strongly  sheared,  and 
a  pronounced  schistosity  has  been  developed  in  a  large  part  of  it.  Some 
portions,  however,  especially  the  southwestern  part,  have  been  much  less 
affected  by  the  shearing  and  are  still  massive.  The  pronounced  schis- 
osity  begins  at  the  United  Verde  mine  and  continues  eastward  as  far  as 
the  rock  is  exposed  on  the  surface.  This  schistosity  has  a  strike  of  about 
N  20°  W  and  occurs  in  bands  of  greater  and  lesser  intensity. 

So  far  as  known  at  present,  the  intrusions  of  United  Verde  diorite 
do  not  penetrate  into  the  mass  of  the  quartz  porphyry,  but  seem  to  follow 
along  its  contact.  Sometimes  the  diorite  cuts  across  branching  arms  of 
the  quartz  porphyry  and  in  places  comes  in  contact  with  the  main  mass, 

14 


210  THE  COST  OF  MINING 

but  large  wedges  of  the  schist  are  included  between  the  irregular  boun- 
daries of  the  two  intrustions.  It  would  appear  that  the  greenstones  near 
the  contact  formed  a  weak  zone,  which  was  followed,  at  least  in  a  general 
way,  by  the  dorite  intrusions.  As  intimated  previously,  the  diorite  is 
strikingly  fresher  than  the  older  rocks,  and  the  contrast  between  its 
massive  structure  and  the  extremely  schistose  part  of  the  quartz  por- 
phyry attracts  immediate  attention.  As  the  diorite  is  patently  a  younger 
rock,  one  is  inclined  to  wonder  why  it  did  not  force  itself  in  along  the 
planes  of  schistosity,  instead  of  going  across  them;  but  that  it  did  not 
do  so  warrants  the  conclusion  that  the  greenstones  border  must  have 
been,  on  the  whole,  less  resistant  than  even  the  most  schistose  bands  of 
the  porphyry.  All  the  known  valuable  orebodies  of  the  Jerome  district 
occur  in  these  greenstone  schists,  which  form  the  border  of  the  quartz 
porphyry,  or  are  within  the  latter  rock  near  its  periphery. 

At  the  United  Verde  mine,  the  orebodies  are  in  a  large  slab  of  green- 
stone schists,  in  horizontal  cross-sections  resembling  a  rude  crescent, 
which  pitches  downward  between  its  enclosing  intrusives,  in  a  north- 
westerly direction,  at  an  angle  of  perhaps  50  to  60°.  The  diorite  covers 
this  slab  of  schist  with  a  concave  surface  like  an  inverted  Spanish  tile, 
and  the  quartz  porphyry  forms  a  rough  pitching  floor.  If  the  included 
schists  were  removed,  there  would  be  an  enormous  cavern  going  down 
steeply  to  the  north. 

The  schists  which  fill  the  space  that  I  have  thus  attempted  to  descibe 
have  been  the  channel  of  an  intense  mineralization,  so  that  a  considerable 
part  of  them  has  been  converted  into  ore.  This  ore  consists  essentially 
of  quartz,  pyrite  and  chalcopyrite.  The  thing  that  attracts  the  eye  is  an 
enormous  mass  of  iron  pyrite,  occupying  a  cross-section  of  nearly  if  not 
fully  10  acres,  rudely  circular  or  elliptical  in  outline,  but  irregular.  The 
quartz  and  chalcopyrite  are  mingled  with  this  mass  in  varying  amounts. 
Near  the  center  of  the  pyrite  mass  there  is  not,  as  I  understand  it,  much 
quartz,  although  the  amount  increases  toward  the  periphery;  but  this 
arrangement  is  far  from  regular.  The  chalcopyrite  is  the  ore.  The  mass 
of  the  pyrite  contains  only  one-quarter  of  1  per  cent,  copper — being 
practically  barren — but  certain  portions  of  it  contain  chalcopyrite  in 
varying  amounts,  so  that  large  lens-like  masses  attain  a  copper  content 
ranging  from  2  per  cent,  up  to  15  or  20  per  cent.  These  are  the  orebodies. 
Chalcopyrite  also  occurs  in  the  schists  around  the  periphery  of  the  pyrite 
masses  and  also  makes  orebodies.  The  ores  contained  in  the  pyrite 
mass  are  called  iron  ores;  those  consisting  of  chalcopyrite  disseminated 
in  the  schist  are  called  siliceous  ores. 

Narrow  Dioritic  Dikes  Cut  Orebodies. — These  broad  features  are 
unmistakable,  and  may  be  regarded  as  thoroughly  established;  but,  as  a 
matter  of  detail,  the  occurrence  of  the  commercial  ore,  as  distinguished 
from  the  mineralization  as  a  whole,  presents  many  eccentricities  that  are 


JEROME  AND  THE  PRE-CAMBRIAN  211 

not  wholly  understood.  The  orebodies  are  cut  by  several  narrow  dioritic 
dikes,  known  as  water  courses.  These  are  usually  considerably  bleached, 
even  in  the  lowest  levels,  far  below  the  influence  of  any  alteration  proceed- 
ing from  the  surface.  This  would  seem  to  indicate  that  the  dikes  have 
been  altered  by  the  mineralizing  agencies.  On  the  other  hand,  there  is 
no  evidence  that  they  have  been  replaced  by  the  ore  minerals.  It  seems 
reasonable  to  conclude,  therefore,  that  they  came  in  during  the  latest 
stages  of  the  mineralizing  process.  These  dikes  have  a  strike  which 
may  be  generalized  as  about  N  70° W;  and  many  observers  have  con- 
cluded that  the  dikes  may  have  followed  a  zone  of  fissuring  which  might 
have  existed  earlier  and  have  been  followed  by  the  mineralization.  If 
this  was  the  case,  there  is  little  evidence  of  it  in  the  orebodies  themselves, 
for  the  minerals  now  form  a  solid  mass  in  which  preexisting  structures 
have  been  obliterated  as  completely  as  in  a  stock  of  granite. 

But  away  from  the  centers  of  intense  mineralization,  in  the  Jerome 
Verde  and  United  Verde  Extension  mines,  some  fissures  have  been  noted 
that  bear  in  the  same  general  direction  as  the  water-course  dikes  and  are 
distinctly,  though  not  heavily,  mineralized.  This  lends  color  to  the  idea 
that  a  zone  of  fissuring  may  have  had  much  to  do  with  establishing  the 
mineralizing  channels. 

New  Mineralized  Area  Developed. — The  United  Verde  Extension 
mine  has  in  recent  years  opened  up  a  mineralized  area  about  two-thirds 
of  a  mile  east  of  the  United  Verde.  Ignoring  for  the  present  other  inter- 
esting facts  about  these  occurrences,  there  is  reason  to  believe  that  they 
are  part  of  the  same  zone  as  the  United  Verde.  But  the  structural 
arrangement  is  still  indistinct,  because  the  development  is  only  partial 
and  because  all  of  it  thus  far  is  in  the  zone  of  oxidation  or  in  that  of  sec- 
ondary enrichment,  in  both  of  which  the  rocks  are  greatly  altered  by 
kaolinization.  In  the  immediate  neighborhood  of  the  orebodies,  there- 
fore, it  is  hard  to  distinguish  some  of  them.  It  seems,  however,  that  some 
of  the  smaller  orebodies  follow  the  contact  of  a  great  wedge-shaped  mass 
of  diorite  between  the  quartz  porphyry  and  the  green  schists.  These 
ores  are  between  the  diorite  and  the  schists.  But  the  great  orebody 
of  the  Extension  mine  is  not  so  easily  described.  It  is  at  the  point  or 
edge  of  the  wedge  of  diorite  and  is  surrounded  apparently  on  all  sides 
by  quartz  porphyry,  but  is  near  the  contact  of  that  rock  with  the  green 
schists.  Moreover,  it  lies  apparently  at  the  intersection  of  two  interest- 
ing mineralized  faults,  one  of  which  strikes  about  N  65°  E  and  the  other 
about  N  70°W. 

It  is  evident  that  in  the  region  of  the  big  orebody  the  United  Verde 
diorite  is  invading  the  contact  between  the  quartz  porphyry  and  the 
green  schists,  but  whether  the  diorite  follows  a  pre-existing  fault,  or 
whether  the  faults  are  later  than  the  diorite,  is  very  obscure.  The 
mineralization  is  intense  over  an  area  of  several  acres,  in  the  central 


212  THE  COST  OF  MINING 

part  of  which  an  area  of  an  acre  and  a  half  is  a  solid  body  of  chalcocite 
and  pyrite  averaging  17  per  cent,  copper. 

It  is  rather  early  to  generalize  about  orebodies  that  are  so  meagerly 
developed,  but  it  looks  as  though  the  vast  masses  of  pyrite,  which  are  a 
sort  of  matrix  for  the  orebodies  of  the  United  Verde,  are  comparatively 
small  in  the  Extension  mine.  Low-grade  pyritic  masses  have  been  en- 
countered, it  is  true,  but  thus  far  they  are  relatively  insignificant,  and 
it  is  not  improbable  that  they  will  continue  so  even  in  the  zone  of  primary 
ores.  If  this  proves  to  be  the  case,  it  will  only  mean,  in  my  judgment, 
that  the  Extension  orebodies  are  more  distinctively  copper  mineraliza- 
tions than  those  of  the  United  Verde.  In  the  latter  mine,  the  copper  ores 
seem  to  have  been  introduced  after  the  formation  of  the  main  pyrite 
masses.  The  later  copper-bearing  mineralization  is  probably  identical 
in  both  mines.  There  is  no  reason  to  believe  that  the  United  Verde 
Extension  bonanza  was  any  richer  as  originally  deposited  than  some  of  the 
individual  orebodies  at  the  United  Verde;  but  it  does  seem  probable 
that,  in  the  Extension,  the  proportion  of  copper  to  the  total  volume  of 
iron  is  very  much  higher.  So  far  as  can  be  judged  at  present,  the  two 
deposits  are  about  equal  as  copper  producers.  Even  making  all  allowances 
for  the  effect  of  secondary  enrichment,  it  is  doubtful  if  the  United  Verde 
orebodies  contain  more  copper,  if  as  much,  per  vertical  foot,  as  those 
of  the  Extension. 

Another  point  of  great  economic  importance  is  the  fact  that  the  two 
parts,  or  halves,  of  the  district  are  separated  by  a  great  fault.  On  the 
hills  above  the  United  Verde,  the  flat-lying  sandstones  and  limestones 
of  Devonian  age  begin  to  appear  at  an  elevation  of  6050  ft.  The  fault 
has  an  average  strike  of  N  37°  W.  East  of  this  is  a  bench,  on  top  of  which 
the  same  sandstones  and  limestones  lie  almost  perfectly  flat,  but  their 
bottom  is  at  an  elevation  of  4350  ft.  The  vertical  displacement  is,  there- 
fore 1700  ft.,  and  in  this  bench  lie  the  Extension  orebodies.  Other 
faults  occur  further  east,  dropping  the  Palaeozoic  formation  to  a  still 
lower  level,  so  that  by  the  Verde  River,  at  Clarkdale,  only  three  miles 
away,  the  pre-Cambrian  floor  is  only  2000  ft.  above  sea  level.  None 
of  these  faults  except  the  big  one  at  Jerome  has  raised  the  pre-cambrian 
rocks  to  the  surface.  East  of  that  fault  they  have  remained  buried 
since  the  invasion  of  the  Palaeozoic  sea.  It  is  all  but  certain  that  in 
the  succeeding  ages,  including  the  present  era,  they  have  never  emerged 
above  the  ground-water  level.  They  are,  therefore,  preserved  intact, 
having  suffered  neither  oxidation  nor  erosion  since  the  day  they  were  buried. 
On  the  United  Verde  side,  however,  the  great  recent  fault  exposed  the 
pre-Cambrian  rocks  in  an  escarpment  1000  ft.  high  above  the  bordering 
bench.  This  escarpment  has  been  beveled  off  by  recent  erosion.  Above 
the  United  Verde  mine,  600  ft.  of  the  orebodies  has  been  removed  by  this 
erosion,  including  nearly  all  of  the  original  oxidized  zone.  The  primary 
sulphides  in  places  come  up  to  the  present  surface. 


JEROME  AND  THE  PRE-CAMBRIAN  213 

\ 

Now,  the  oxidation  plainly  acted  more  vigorously  in  the  larger  ore- 
bodies  than  in  the  smaller  ones,  and  the  copper  migrated  further.  If 
there  had  been  smaller  orebodies  in  the  vicinity  of  the  United  Verde,  the 
enriched  portions,  as  well  as  the  oxidized  zone,  would  have  been  swept 
away,  leaving  only  the  ores  of  the  primary  zone  at  the  present  eroded 
surface.  A  small  vein  carrying  3  or  4  per  cent,  copper  would  not  be 
valuable.  On  the  other  side  of  the  fault,  such  small  veins  are  still  intact, 
oxidized  zone,  enriched  zone,  and  all.  In  the  enriched  zone  they  carry 
fair  bodies  of  chalcocite,  running  15  to  45  per  cent,  copper.  Such  small 
veins  are,  therefore,  valuable  and  make  a  pleasing  adjunct  to  the  big 
ones. 

Great  Amount  of  Low -Grade  Ore  in  United  Verde. — As  in  other 
districts  where  rich  ores  occur  in  abundance,  the  operators  have  naturally 
preferred  to  mine  those  rich  ores  in  preference  to  poorer  ones.  It  is, 
therefore,  difficult  to  form  an  idea  of  the  average  grade  of  all  the  merchant- 
able ores.  It  is  certain  that  large  amounts  of  low-grade  ore,  say  from 
%  to  2J^  per  cent,  copper,  occur  in  the  United  Verde  mine.  Some  of 
this  material  goes  into  the  shipping  product,  inevitably,  because  the 
miners  cannot  always  keep  it  out,  but  no  effort  has  been  made  to  utilize 
it.  How  much  there  is  of  it,  how  cheaply  it  can  be  mined,  the  extent 
to  which  it  could  be  concentrated  by  flotation,  are  all  unsolved  problems, 
and  any  assertion  about  them  would  be  pure  guesswork.  However,  I 
regard  it  as. probable  that  in  the  course  of  time  it  will  be  found  desirable 
and  practicable  to  concentrate  some  of  the  low-grade  ores;  and  the  life 
of  the  mines  will  be  greatly  prolonged  by  so  doing. 

Output  from  United  Verde  Mine. — At  present  the  United  Verde  mine 
is  able  to  ship  to  its  smeltery  an  assemblage  of  ores,  practically  all  pri- 
mary, averaging  about  5  per  cent,  copper  and  yielding  about  90  Ib.  copper, 
1%  oz.  silver,  and  35c.  gold  per  ton.  It  may  be  assumed  that  this  grade 
was  much  higher  in  the  earlier  years  of  the  mine  and  that  it  has  slowly 
declined.  It  is  probable,  however,  that  by  careful  mining  the  grade  may 
be  maintained  at  its  present  level  for  a  number  of  years,  although  it  is 
planned  to  increase  the  output  to  1,000,000  tons  a  year,  increasing  the 
present  tonnage  by  about  15  per  cent.  This  will  mean  that  the  output 
of  copper  will  rise  to  90,000,000  or  perhaps  100,000,000  Ib.  a  year  in  the 
near  future.  The  assurance  that  this  can  be  done  is  furnished  by  the 
discovery  or  a  large  body  of  high-grade  chalcopyrite  ore  in  the  lower 
levels  of  the  mine,  from  2100  to  2500  ft.  below  the  original  pre-Cambrian 
surface.  This  orebody,  I  understand,  runs  about  10  per  cent,  copper, 
and  a  large  section  of  it,  opened  for  stoping,  has  averaged  nearly  13  per 
cent.  A  cross-section  of  the  orebody  near  its  middle  would  apparently 
cover  at  least  an  acre. 

On  the  United  Verde  Extension  side  202,477  dry  tons  of  ore  has  been 
shipped  up  to  the  end  of  1917,  entirely  from  the  richest  part  of  the  zone 


214  THE  COST  OF  MINING 

of  secondary  enrichment,  from  which  the  actual  yield  has  been  about 
104,000,000  Ib.  copper,  375,000  oz.  silver,  and  7000  oz.  gold.  The  grade 
of  ore,  as  shipped,  has  averaged  about  27  per  cent,  copper,  1%  oz.  silver, 
and  70c.  gold  per  ton.  It  is  not  believed  that  such  ores  can  be  shipped 
much  longer,  but  there  is  no  reason  to  suppose  that  the  grade  will  go 
below  10  per  cent,  copper  for  a  number  of  years.  In  fact,  one  may  be 
fairly  certain  that  the  first  2,000,000  tons  mined  will  average  15  per  cent, 
copper.  If  this  rate  is  maintained,  will,  say,  10,000,000  tons  of  United 
Verde  ore  over  a  10-year  period  beginning  in  1915,  the  date  of  the  opening 
of  the  Extension  mine,  the  average  grade  for  the  district  for  that  length 
of  time  will  be  not  less  than  6%  per  cent,  copper.  This  is  high-grade 
ore,  considering  that  it  is  obtained  without  sorting  of  any  kind;  but  it  is 
no  richer  than  the  average  of  the  Bisbee  district  to  date.  When  one 
considers  the  fact  that  this  ore  is  being  mined  at  depths  varying  from  400 
to  2500  ft.  below  the  pre-Cambrian  surface;  that  none  of  the  mines  is 
exhausted  at  any  level;  that  the  Extension  mine  has  no  development 
at  all  more  than  800  ft.  below  the  pre-Cambrian  surface,  and  almost  none 
below  600  ft. — that,  in  fact,  the  exploration  of  the  zone  east  of  the  fault 
is  hardly  more  than  well  started — it  may  reasonably  be  expected  that  these 
mines  will  make  a  big  output  and  have  a  long  life.  In  1917  they  produced 
135,000,000  Ib.  of  copper,  and  are  being  equipped  to  produce  150,000,000 
to  200,000,000  Ib.  a  year.  There  is  no  reason  to  suppose  that  such  an 
output  will  put  an  undue  strain  upon  the  ore  reserves.  Thus  Jerome, 
which  for  25  years  was  an  isolated  and  obscure  camp,  is  now  becoming  an 
important  producer.  I  shall  try  to  give  some  idea  of  the  community 
as  an  industrial  and  mining  center. 

Up  to  the  present,  from  an  output  of  something  less  than  a  billion 
pounds  of  copper,  the  two  mines  of  Jerome  have  paid  $50,114,000  in 
dividends.  They  have  also  built,  out  of  earnings,  two  large  smelteries, 
a  considerable  length  of  railroad,  extensive  tunnels  and  mining  equipment, 
two  or  three  rather  important  industrial  towns,  completed  or  under  way, 
and  have,  no  doubt,  large  amounts  of  cash  in  the  treasury.  A  rough  com- 
putation of  the  operating  earnings  up  to  the  end  of  1917  is  not  less  than 
$80,000,000.  Of  this,  perhaps  half  has  been  earned  during  the  exceptional 
years  1916  and  1917  from  and  output  of  225,000,000  Ib.  There  is  good 
reason  to  suppose,  however,  that  the  earnings  on  700,000,000  Ib.  during 
normal  peaceful  times  were  about  $42,000,000,  or  6c.  per  Ib.  There  is 
also  reason  to  believe  that  if  the  output  of  the  last  two  years  had  been 
made  in  normal  times,  with  a  price  of  15  c.  per  Ib.  for  copper,  the  operating 
profits  would  have  been  $20,000,000.  Thus,  I  believe  the  past  history 
of  the  camp  indicates  an  average  operating  profit  of  about  6^c.  per  Ib. 
and  a  cost  of  about  8  to  9  cents. 

It  appears  that  up  to  the  end  of  1915,  the  United  Verde  mine  had  been 
able  to  pay  $36,397,000  in  dividends  in  a  period  of  21  years,  during  which 


JEROME  AND  THE  PRE-CAMBRIAN  215 

the  price  of  copper  had  averaged  14. 3c.,  the  production  being  fairly 
uniform  at  about  35,000,000  Ib.  a  year.  Five  cents  has  been  available 
for  dividends,  leaving  a  net  cost  of  9.3c.  per  Ib.  to  cover  all  expenditures 
for  mining,  smelting,  development,  construction  of  railroad  and  smeltery, 
general  expenses,  and  increase  of  working  capital.  The  net  yield  per  ton 
has  probably  averaged  about  100  Ib.  copper,  1%  oz.  silver  and  40c. 
gold.  The  average  value  of  the  precious  metals  figures  down  to  about 
IJ^c.  per  Ib.  of  copper,  so  that  if  the  average  price  of  that  metal  is  14. 3c., 
the  total  value  of  the  bullion  will  be  15.55c.  On  this  basis,  a  liberal 
allowance  for  all  expenses,  both  for  operating  and  capital,  on  a  total 
output  of  700,000,000  Ib.,  has  been  10.05c.  per  Ib.  The  cost  of  convert- 
ing, refining  and  marketing  the  bullion  may  be  estimated  at  1.85c.  per 
Ib.,  teaving  8.2c.  per  Ib.  for  all  other  expenses. 

United  Verde  Extension  Possibilities. — Apply  these  figures  to  the 
extraordinary  bonanzas  opened  by  the  United  Verde  Extension,  in  which 
2,000,000  tons  of  ore  can  be  counted  on  to  run  15%  copper  and  to  yield 
290  Ib.  copper,  lj^  oz.  silver  and  60c.  gold  per  ton,  with  operating 
methods  equally  efficient  as  those  of  the  United  Verde.  The  value  of  this 
bullion  is  14. 8c.  per  Ib.  Deducting  1.85c.  per  Ib.  for  converting,  refining, 
and  marketing,  there  remains  12.95c.  per  Ib.  The  mining,  smelting, 
construction,  and  general  expenses  will  be,  as  before,  $8.20  a  ton,  to  be 
divided  by  290  Ib.  copper.  This  is  equal  to  2.83c.  per  Ib.  Deducting 
this,  there  remains  10.12c.  per  Ib.,  which  should  be  applicable  to 
dividends.  I  can  see  no  flaw  in  this  reasoning,  although  the  result 
appears  extraordinary. 

It  is  fair  to  believe  that  the  total  output  of  copper,  580,000,000  Ib., 
according  to  this  computation,  would  be  extracted  in  10  years,  and  that 
dividends  of  $60,000,000  would  be  paid  in  that  time,  leaving  the  mine 
intact  for  further  development  and  a  complete  equipment.  Under 
these  circumstances,  it  seems  to  me  that  the  investor  is  warranted  in 
figuring  that  the  $60,000,000  profits  expected  in  10  years  is  a  conservative 
and  guarded  basis  for  valuing  the  property;  that  he  might  assume  a  5% 
net  return,  plus  return  of  capital,  to  be  sufficient  for  a  property  so  guarded, 
and  that  he  would  have  important  speculative  probabilities  in  addition. 
Under  these  circumstances,  it  is  computed  that  the  property  possesses 
a  valuation  of  $45,000,000. 

The  " speculative  probabilities"  refer  to  the  discovery  of  additional 
ores.     There   is   likelihood   of   such  discoveries,  both  laterally  and  in 
depth.     Exploration  in  depth  has  gone  down  only  one-third  as  far  below 
the  original  surface  as  in  the  United  Verde,  in  which  mine  bonanza  or 
occurs  in  the  very  bottom. 

Before  ending  the  discussion  of  the  prerCambrian  deposits  which  have 
proved  so  valuable  at  Jerome,  it  will  be  interesting  to  note  the  extension 
of  the  same  formations  to  the  southwest.  At  Jerome  itself  'there  is 


216  THE  COST  OF  MINING 

merely  a  narrow  point  of  a  wedge  of  pre-Cambrian,  raised  up  through  a 
cover  of  Palaeozoic  sediments  by  faulting,  aggregating  in  vertical  move- 
ment 400  ft.,  which  has  taken  place  along  a  zone  a  mile  and  a  half  wide. 
It  is  thus  upon  the  escarpment  of  an  important  recent  mountain  uplift. 
The  Palaeozoic  formations  at  Jerome  present  two  peculiarities  that  are 
worth  noting: 

1.  The  series  begins  with  the  Devonian,  at  least  that  is  my  supposi- 
tion. The  lowest  limestone  is  known  to  be  Devonian,  and  between  it  and 
the  pre-Cambrian  complex  there  is  only  about  50  ft.  of  sandstone.  Ran- 
some  assumes  that  this  sandstone  corresponds  to  the  Tonto  sandstone 
(Cambrian)  of  the  Grand  Canyon,  but  I  take  this  to  be  merely  a  slip  of 
the  pen.  It  is  hardly  possible  for  a  few  feet  of  sandstone  to  carry  with  it 
any  presumption  of  equivalence  in  age  with  some  other  sandstone  that 
looks  like  it.  Each  invasion  of  the  sea  produces  a  basal  sandstone  by 
reasserting  the  weathered  debris  on  the  land  surface.  Such  a  basal 
sandstone  merely  marks  the  sea  transgression,  and  the  same  one  might, 
and  no  doubt  does,  mark  the  progress  of  the  sea  upon  higher  and  higher 
levels  of  a  continental  area  through  a  series  of  geologic  ages.  In  the 
absence  of  determining  fossils,  the  age  of  such  a  sandstone  should 
be  assumed  to  be  that  of  the  contiguous  rock  overlying,  if  that  is 
de  terminable. 

Now,  throughout  Arizona  there  are  usually  some  Cambrian  strata 
in  the  Palaeozoic  column,  but  the  Ordovician  and  the  Silurian  are  generally 
wanting.  Ordinarily,  there  is  no  angular  unconformity  between  the 
Cambrian  and  the  Devonian,  in  spite  of  the  huge  time  gap  represented 
by  the  absence  of  the  Ordovician  and  Silurian.  To  explain  this,  one  has 
only  to  remember  that  in  Russia,  along  the  Gulf  of  Finland,  Cambrian 
and  Ordovician  strata  are  still  unconsolidated  sand  and  clay.  They  have 
lain  there  through  interminable  ages  without  change,  distortion,  meta- 
morphism,  or  even  hardening,  because  the  earth's  crust  in  that  region  has 
remained  still.  It  is  entirely  conceivable  that,  around  Petrograd,  Quarter- 
nary  strata  may  be  in  contact  with  and  in  apparent  conformity  with  the 
Ordovician. 

Interesting  Geologic  Facts  and  Deductions. — In  Arizona  the  absence 
of  unconformity  between  the  Cambrian  and  the  Devonian  must  mean 
simply  a  long  period  of  quiet,  with  gentle  oscillations  of  level,  and  no 
deposition;  certainly  no  mountain  building,  and  no  deep  erosion.  In 
Devonian  times  there  followed  a  general  immersion  in  the  sea  of  this 
whole  region.  By  this  time  the  neighboring  lands,  wherever  they  were, 
must  have  been  worn  down  so  flat  that  they  could  furnish  little  or  no 
clastic  sediment,  for  the  Devonian  rocks  are  almost  pure  limestones. 
From  Cananea  to  Grand  Canyon  and  from  Tucson  to  Clifton,  and  no 
one  knows  how  much  further  in  all  directions,  there  was  a  sea  of  clear 
water  of  moderate  depth,  and  full  of  corals  and  coral  reefs. 


JEROME  AND  THE  PRE-CAMBRIAN  217 

An  interesting  question  which  may  be  solved  some  time  is  whether 
the  highlands  southwest  of  Jerome  may  not  have  been  an  island  in  this 
Devonian  sea.  The  absence  of  strata  older  than  the  Devonian  and  the 
strong  inference  that  there  had  intervened  no  considerable  disturbance 
or  erosion,  which  was  likely  to  have  swept  away  such  strata  in  pre-Devon- 
ian  times,  point  decidedly  to  the  conclusion  that  there  was  comparatively 
high  land  at  the  site  of  Jerome  which  the  Cambrian  sea  did  not  reach. 
This  naturally  brings  up  the  question  whether  the  slope  may  not  have 
continued  in  some  direction  toward  a  massif  high  enough  to  remain  an 
island  even  during  a  large  part,  or  all,  of  the  succeeding  submergence. 

Assuming  that  the  Devonian  strata  were  originally  level,  it  is  possible 
to  calculate  that  the  pre-Cambrian  surface  at  Jerome  was  originally  1000 
ft.  higher  than  the  same  surface  at  Grand  Canyon,  there  being  that 
amount  of  Cambrian  strata  under  the  Devonian  at  Grand  Canyon  and 
none  at  Jerome.  The  same  facts  appear  in  comparing  the  sections  of 
Bisbee,  Ray,  Globe,  and  Roosevelt  Dam  (Ransome) .  As  all  these  places 
lie  toward  the  southeast,  east  and  north,  it  is  easy  to  explain  the  facts  by 
a  depression  along  axis  lying  northeast  of  Jerome,  and  therefore  approxi- 
mately under  the  edge  of  the  plateau  region.  If  this  is  true,  it  is  logical 
to  assume  that  the  land  surface  sloped  upward  toward  the  southwest. 
How  far  this  slope  continued,  or  to  what  height,  one  has  no  means  of 
knowing,  except  that  there  is  good  reason  to  believe  that  in  Devonian 
times  the  slopes  were  gentle,  erosion  was  slow,  and  no  large  rivers  were 
debouching  near  enough  to  muddy  the  waters. 

2.  The  Palaezoic  strata  are  found  at  the  very  top  of  the  Black  Hills 
(the  mountain  block  on  the  edge  of  which  Jerome  stands),  but  they 
merely  lie  on  the  outer  rim  of  the  uplift,  and  do  not  continue  toward  the 
southwest  for  more  than  a  mile  or  two.  They  appear  to  feather  out. 
There  is  no  indication  of  their  having  been  broken  off  by  further  faulting. 

I  do  not  refer  to  this  fact  as  evidence  of  the  thinning  out  of  the 
Palaeozoic  deposition  in  that  direction.  That  conclusion  must  be  based 
on  broader  facts  than  those  I  am  pointing  to.  It  appears  that  the  edge  of 
the  Palaeozoics  occurs  as  fragments  of  an  arc  of  a  curve  the  radius  of  which 
is  about  25  miles,  and  its  center  some  distance  southeast  of  the  town  of 
Prescott.  The  fragments  of  this  arc  are  found  on  the  crest  of  the  Black 
Hills  west  of  Camp  Verde  and  east  of  Prescott,  thence  northwest  along 
the  crest  of  the  Black  Hills  to  near  Jerome  Junction.  At  Jerome  Junc- 
tion there  is  a  gap,  but  just  north  of  that  place  the  edge  of  the  Palaeozoics 
may  be  covered  up  with  recent  lavas.  Six  miles  west  of  Jerome  Junction 
the  Palaeozoics  appear  again  in  a  strong  ridge  running  west.  All  along 
the  rim  of  this  arc  the  strata  dip  gently  away  from  the  center. 

PRACTICAL  IMPORTANCE  OF  GEOLOGIC  CONSIDERATIONS 

I  think  there  is  warrant  for  believing  this  structure  is  the  remnant  of 
a  dome  or  arch  that  was  formed  in  Tertiary  times,  if  not  earlier,  and 


218  THE  COST  OF  MINING 

extensively  eroded  long  before  the  occurrence  of  the  big  faulting  at 
Jerome  or  the  late  Tertiary  volcanic  activity  of  the  region.  If  the  Pa- 
laeozoics be  projected  along  their  dip  in  to  thePrescott  region,  they  would  be 
found  thousands  of  feet  above  the  present  surface.  In  the  area  now  under 
consideration,  this  means  that  the  original  pre-Cambrian  land  surface  does 
not  exist  in  the  sense  that  it  exists  at  Jerome — i.e.,  intact  but  buried — 
but  that  there  does  exist,  instead  a  new  erosion  surface  scored  down  more 
or  less  during  long  geologic  ages. 

I  believe  these  observations  to  have  practical  importance,  for  without 
them  it  would  be  difficult  to  understand  the  deposits  of  the  Prescott 
region,  or  to  have  any  logical  conception  of  the  relationship  between  them 
and  those  of  Jerome.  The  present  surface  of  the  scored  dome  just 
described  is  strewn  with  much  recent  lava,  probably  of  the  age  of  the 
San  Francisco  peaks.  There  are  also  many  remnants  of  older  volcanics, 
or  intrusives,  many  of  which  are  too  fresh  and  undisturbed  to  have 
participated  in  the  intense  mountain-building  activities  of  pre-Cambrian 
and  pre-Algonkian  time.  There  may  be  many  igneous  rocks  of  ages 
anywhere  from  Permian  to  Tertiary.  Some  of  the  ore  deposits  which 
have  been  worked  in  this  area,  off  and  on,  for  the  last  50  years,  may  be 
derived  from  these  comparatively  recent  intrusions.  I  suspect  this  to 
be  the  case  with  the  copper  mines  at  Copper  Basin,  about  eight  miles 
southwest  of  Prescott. 

The  Mayer  Copper  Mines. — The  far  more  important  and  promising 
copper  mines  near  Mayer,  20  miles  southeast  of  Prescott,  are  patently 
pre-Cambrian  and  are  not  to  be  explained  as  emanating  from  later 
igneous  activity.  The  largest  mine  in  this  district,  the  Blue  Bell,  is 
30  miles  south  and  10  miles  west  of  the  United  Verde,  and  about  20 
miles  west  of  the  nearest  Palaeozoic  rim.  The  original  pre-Cambrian 
surface  in  this  locality  has  undoubtedly  been  scored  down  at  least  2000 
or  3000  ft.,  but  the  exact  amount  I  have  no  present  means  of  estimating. 
If,  therefore,  these  deposits  may  be  assumed  to  have  had  about  the  same 
relation  to  the  pre-Cambrian  surface  as  those  of  Jerome  (a  mere 
assumption  certainly,  but  let  it  go  at  that),  one  must  conclude  that  the 
Mayer  mines  represent  a  deeper-seated  stage  of  mineralization. 

In  the  Mayer  district  the  rocks  are  known  as  Yavapai  schists.  They 
appear  to  be  ancient  surface  volcanics  for  the  most  part,  mainly  green- 
stones of  about  the  composition  of  diorite  or  diabase.  There  are  no 
doubt  plenty  of  intrusives  mixed  in.  The  copper  deposits  all  occur  in 
some  quartz  porphyry  dikes  which  cut  the  greenstones  and  strike  about  N 
10°  to  15°  E.  Many  of  these  rocks  have  been  subjected  to  an  extra- 
ordinarily energetic  squeezing  which  has  produced  in  all  of  them  a 
schistosity  that  strikes  N  28°  E.  It  is  so  strong  in  places  that  the  quartz 
porphyry  looks  like  a  light  colored  and  very  fissile  slate. 

There  is  one  important  difference  between  these  deposits  and  those  of 


JEROME  AND  THE  PRE-CAMBRIAN  219 

Jerome — there  is  no  United  Verde  diorite  or  anything  like  it.  The  ore- 
bodies  are  all  within  or  on  the  contacts  of  the  squeezed  dikes  of  quartz 
porphyry.  In  all  other  respects  they  are  similar,  but  smaller  and  not  so 
rich.  The  Blue  Bell  mine  has  produced  to  date  about  600,000  tons  of  ore, 
and  has  500,000  tons  more  in  sight  above  the  1200-ft.  level.  In  1917 
this  mine  shipped  about  120,000  tons  of  ore,  averaging  a  shade  over 
3  per  cent,  copper  and  $1.50  per  ton  in  gold  and  silver.  About  half  this 
ore  is  concentrated;  the  other  half  is  massive  pyrite,  much  like  that 
of  the  United  Verde.  The  Blue  Bell  orebodies  are  easily  mined,  the 
cost  of  mining  under  present  conditions  being  a  little  over  S3  a  ton, 
including  development.  On  a  return  to  pre-war  conditions  this  cost 
would  be  reduced  to  about  $2.25  per  ton,  delivered  to  the  railroad. 
There  is  no  apparent  reason  why  such  ores  should  not  be  valuable 
under  normal  prices. 

In  all  this  discussion  of  the  Jerome  and  contiguous  district,  I  have 
gone  only  slightly  into  the  details  of  cost.  The  fact  is,  the  district 
displays  little  of  special  interest  in  this  respect,  and  the  reports  of  the 
mining  companies  give  meager  details.  The  striking  features  are  pre- 
cisely those  already  dwelt  on;  the  geology,  the  big  faults,  the  rich  con- 
centrations of  ore,  which  allow  low  unit  costs  for  copper  without  much 
regard  for  costs  per  ton  mined:  and  the  corollary  that  successful  mining 
is  largely  successful  exploration.  In  the  whole  area  considered  there  are 
seven  or  eight  mines  that  have  dealt  with  deposits  such  as  those  described. 
Of  these,  two  are  wonderful  bonanzas.  The  others  are  either  mediocre 
producers,  like  the  Mayer  Mines  just  mentioned,  or  immature  prospects, 
Canyon  and  a  few  others.  One,  the  Copper  Chief,  southeast  of  Jerome, 
is  working,  for  gold,  the  oxidized  gossan  of  a  large  pyrite  deposit  which 
has  proved  unprofitably  low  in  copper.  In  addition  to  these  there 
are  many  prospects,  some  of  which  are  mere  wildcats  and  others  genuine 
enterprises  testing  various  theories  as  to  the  location  of  possible  extensions 
of  mineralized  areas. 

In  all  this  fervor  of  exploration,  a  detached  and  unprejudiced  observer 
may  find  one  lesson  worth  noting,  namely  that  exploration  of  new  ground 
for  possible  ore  deposits  demands  the  same  attention  to  adequate  equip- 
ment and  adequate  finance  as  the  mining  of  ores  actually  found.  Vast 
sums  of  money  have  been  squandered  through  loss  of  time  and  failure 
to  accomplish  the  work  planned — by  trying  to  make  two  horsepower 
equal  four  horsepower.  Shafts  too  small  and  too  insecure,  hoists  that 
will  not  raise  the  load  from  the  required  depth,  pumps  that  will  not  handle 
the  water,  result  finally  in  no  room  for  ventilation,  injury  to  health  of 
the  men,  and  meager  results:  and  often  the  whole  job,  instead  of  being 
a  question  of  drilling  holes  and  breaking  rock,  becomes  a  blind  and  useless 
struggle  with  bad  air,  broken  pipes,  rotten  timber,  heat,  water  and  mud. 

The  spectacular  development  and  success  of  the  United  Verde  Ex- 


220  THE  COST  OF  MINING 

tension  are  due  almost  wholly  to  good  prospecting  engineering.  The 
project  had  been  going  on  in  some  such  fashion  as  that  described  in  the 
preceding  paragraph  for  I  don't  know  how  many  years.  It  had  been 
started  with  enthusiasm,  but  with  little  calculation,  by  a  man  named 
Fisher,  on  a  small  fraction  called  the  Little  Daisy,  right  on  the  great 
Jerome  fault.  A  shaft  had  been  sunk  800  ft.  through  this  fault  into  hard 
quartz  porphyry.  All  lateral  workings  had  to  go  out  through  the  fault 
again.  A  winze  had  been  sunk,  again  along  the  fault,  to  the  1200-ft. 
level.  All  this  work  had  dug  up  some  indications  of  ore,  but  the  practical 
result  was  failure  and  discouragement,  and  the  enterprise  was  considered 
to  be  a  mere  wildcat. 

When  James  S.  Douglas  and  George  E.  Tener  decided  to  undertake 
the  prospect,  they  applied  common  sense  to  the  situation  and  came  to  a 
sound  conclusion.  It  would  cost  $250,000  to  explore  the  ground,  anyway, 
and  this  amount  of  money,  spent  in  a  safe  shaft  with  good  equipment, 
would  accomplish  the  work  more  cheaper  and  quickly  than  is  would  if 
spent  in  the  old  shaft.  They  accordingly  sank  a  new  shaft  1400  ft.  in  a 
central  location  in  solid  rock.  When  they  struck  ore,  they  were  able 
to  ship  it  immediately  in  good  volume.  Their  new  shaft  was  sufficient, 
as  things  turned  out,  to  make  an  output  of  63,000,000  Ib.  of  copper  a  year, 
and  to  make  profits  at  times  exceedig  $1,000,000  a  month.  That  part 
was  luck,  of  course,  under  any  interpretation  of  that  rather  uncertain  word, 
but  good  management  consists  of  so  acting  that  when  luck  comes  your 
way  you  can  make  the  most  of  it.  I  suppose  that  if  no  ore  had  been 
found,  the  level-headed  gentlemen  who  created  the  mine  would  have  been 
pointed  to  as  victims  of  over  confidence — a  renewed  warning  against 
(some  phase  of)  the  danger  of  building  a  mill  before  you  find  a  mine. 
The  indictment  would  have  been  false.  They  took  a  true  measure  of 
the  job  as  a  piece  of  pure  prospecting. 


CHAPTER  XIV 

LAKE  SUPERIOR  COPPER  MINES 

REMARKS  ON  GEOLOGY — RESUME  OP  COSTS  IN  1911 — GENERAL  WORKING  CONDITIONS 
— PLANTS  REQUIRED — COST  OF  SMELTING — THREE  TYPES  OF  DEPOSITS — ORDINARY 

AMYGDALOIDS WOLVERINE,  AHMEEK,  ALLOUEZ,  ISLE  ROYALE,  OSCEOLA BALTIC 

LODE — CHAMPION,    TRIMOUNTAIN,   BALTIC — CONGLOMERATE  LODE — TAMARACK, 
CALUMET  AND  HECLA. 

The  Lake  Superior  district,  for  a  long  time  almost  the  sole  producer 
of  copper  in  North  America  and  still  a  prominent  one,  has  lost  some  of  its 
comparative  importance  in  the  past  ten  years  through  the  continued 
growth  of  production  along  the  Pacific  seaboard  in  North,  and  also  in 
South  America.  In  1909  it  produced  some  21  per  cent,  of  the  copper  of 
the  United  States  and  13  per  cent,  of  ^that  of  the  world,  but  in  1916  its 
proportions  had  been  reduced  to  about  13  and  8  per  cent,  respectively. 

In  the  preceding  chapter  some  hint  was  given  of  the  broad  facts  of 
pre-Cambrian  geology,  linking  the  Lake  deposits  to  the  same  chain  of 
events  that  produced  those  of  Jerome.  Presumably  the  same  kind  of 
relationship  covers  also  the  copper-nickel  ores  of  Sudbury,  Ontario,  the 
unique  silver  deposits  of  Cobalt,  the  gold  mines  of  Porcupine  and  the 
unique  zinc  deposits  of  Franklin  Furnace,  New  Jersey.  In  fact  nearly 
all  these  pre-Cambrian  districts  present  unique  and  striking  features; 
but  they  differ  from  each  other  as  much  as  they  differ  from  deposits  of 
later  age. 

The  copper  bearing  rocks  of  Lake  Superior  cover  a  wide  area  but  the 
productive  portion  is  a  tract  about  50  miles  long  upon  the  Keweenaw 
peninsula  and  the  adjoining  mainland,  on  the  central  portion  of  the 
south  shore  of  the  lake.  The  bulk  of  the  formation  perhaps  lies  under 
the  waters  of  the  lake,  being  exposed  on  the  principal  islands.  It  was  a 
huge,  but  local,  pile  of  volcanic  rocks  which  was  built  up  apparently 
along  the  flank  of  the  post-Algonkian  mountain  range  which  was  formed 
to  the  southward  and  after  the  Huronian  rocks  had  suffered  considerable 
compression  and  erosion.  The  Keweenawan  rocks  do  not  offer  the  ap- 
pearance of  having  been  greatly  folded,  but  rather  the  tilting,  quite  steep 
in  places,  that  might  be  accomplished  along  the  edges  of  a  great  subsiding 
mass.  They  are  not  otherwise  disturbed  or  altered,  except  by  a  few 
moderate  faults. 

In  the  five  years  1906  to  1910  inclusive  the  twelve  principal  mines, 
three  of  which  were  unprofitable,  had  the  following  record  which  I  be- 

221 


222 


THE  COST  OF  MINING 


lieve  exhibits  more  correctly  than  any  other  table  the  general  aspects  of 
the  business  under  pre-war  conditions. 


Tons  rock  stamped 

Total  yield,  pounds 

Yield  per  ton,  pounds 

Receipts  from  sale  of  copper 

Average  price  per  pound 


40,000,000 

1,000,000,000 

25 

$149,806,420 
14.98  cents. 


MAP  OF  LAKE  SUPERIOR^ 
COPPER  JIIMNG  DISTRICT 


Redrawn  from  Map  by  R.  M.  Edwards.  Hongbtun.  Mlchlcan. 


FIG.  4. 
COST  OF  PRODUCTION 


Mining,  transportation  and  smelting 
Smelting  (partly  included  in  mining) 
Construction 
General  expenses 
Miscellaneous  .  . 


Per  ton 

$  79,626,898       $1.98 
8,404,386  .21 

8,885,002 
3,687,476 
1,110,844 


0.22 
0.09 
0.03 


Total  expense 

Cost  per  pound  copper  10.1  cents. 


$101,714,067      $2.54 


LAKE  SUPERIOR  COPPER  MINES  223 

This  calculation  agrees  in  all  essential  respects  with  the  record  for 
twenty  years  1890  to  1909  inclusive,  during  which  the  average  price  was 
13.7  cents,  the  profits  slightly  under  4  cents  per  pound  and  the  cost 
something  over  9.7  cents  per  pound,  except  that  in  this  period  there  had 
undoubtedly  been  a  decline  in  the  yield  per  ton.  Under  pre-war  condi- 
tions therefore  we  might  conclude  that  the  average  profit  was  not  far 
from  4  cents  a  pound,  this  being  somewhat  under  30  per  cent,  of  the  sell- 
ing price  of  the  metal.  This  was  a  margin  of  profit  that  few  other  dis- 
tricts have  been  able  to  equal. 

It  will  be  seen  from  more  specific  data  which  is  inserted  with  refer- 
ence to  particular  mines,  that  the  yield  per  ton,  especially  under  the  stimu- 
lus of  war  conditions  has  continued  to  decline.  Engineering  projects 
have  been  undertaken  by  the  chief  mines  to  match  this  decline  of  yield 
by  a  reduction  of  costs.  How  far  this  effort  has  succeeded  is  at  present 
obscured  by  the  disturbance  of  the  economic  factors  which  has  not 
subsided  far  enough  to  make  comparisons  reliable.  It  was  the  goal  of 
the  Calumet  and  Hecla  management,  for  instance,  to  secure  "dollar 
rock;"  that  is  to  mine  and  mill  the  ordinary  amygdaloid  for  $1.00  per 
ton.  They  never  reached  this  goal,  although  it  will  be  seen  from  the 
appended  statements  that  some  of  the  mines,  the  Osceola  for  instance, 
came  near  it  in  1912  and  again  in  1915. 

In  1911  I  estimated  that  about  3,000,000,000  pounds  of  copper  to  be 
obtained  from  some  150,000,000  tons  of  rock  could  safely  be  counted  on. 
This  was  doubtless  an  underestimate  of  the  ultimate  output,  but  it  is 
certainly  true  that  the  exhaustion  of  the  richest  mine,  the  Calumet  and 
Hecla  conglomerate,  will  remove  a  producer  that  is  not  likely  to  be  re- 
placed. The  Champion  mine  has  made  some  valuable  developments 
and  the  Quincy  has  not  suffered  from  the  caving  which  at  one  time  prom- 
ised to  put  an  end  to,  or  seriously  interrupt,  the  operations,  but  in 
general  it  must  be  conceded  that  the  district  is  already  on  the  wane. 
Up  to  date  it  has  produced  over  7,000,000,000  pounds  of  copper.  Accord- 
ing to  my  estimate  of  1911  something  like  1,600,000,000  pounds  remain 
to  be  added  to  this.  Whether  the  district  can  produce  much  more  than 
this  amount  that  will  be  profitable  in  like  proportion  and  under  the  same 
conditions  as  that  already  produced  still  remains  to  be  seen.  It  is  to  be 
remembered  that  declining  districts  often  make  a  large  yield  on  which 
the  margin  of  profit  is  scanty  or  wanting. 

Here  follow  some  remarks  retained  from  the  first  edition. 

The  Lake  Superior  copper  mines  work  deposits  of  native  metal 
occurring  either  in  beds  of  conglomerate  or  in  amygdaloids,  which  mark 
the  upward  surface  of  ancient  lava  flows.  The  deposits  in  these  beds  form 
immense  ore  shoots  of  dimensions  in  one  case  as  great  as  three  miles  in 
length  and  over  a  mile  in  width  in  the  plane  of  the  vein,  covering  many 
hundred  acres.  Such  a  lateral  extent,  combined  with  a  thickness 


224  THE  COST  OF  MINING 

of  from  6  to  30  ft.,  gives  a  volume  of  many  million  tons  of  workable 
material. 

The  persistence  and  extent  of  the  deposits  have  long  established  that 
the  controlling  factor  in  the  successful  exploitation  of  these  mines  is 
the  provision  of  machinery  for  handling  large  quantities  of  material 
for  long  periods  of  time.  The  practice  prior  to  1908  fixed  a  cost  of 
about  $1,500,000  as  necessary  for  the  preliminary  development  and 
equipment  of  a  property  on  a  scale  commensurate  with  economy.  The 
actual  working  of  the  deposits  is  simple.  The  mines  are  dry  and  safe; 
the  ores  of  each  deposit  are  uniform  in  character  and  can  be  concentrated 
easily  and  cheaply;  the  smelting  operations  are  reduced  to  a  minimum, 
the  concentrates  to  be  smelted  ranging  from  1  to  4J^  per  cent,  of  the  ore 
milled.  Wages  are  very  moderate,  being  about  25  cents  an  hour;  sup- 
plies of  all  kinds  are  cheap;  the  country  in  the  neighborhood  of  the  mines 
is  well  watered  and  well  timbered;  transportation  to  and  from  markets 
is  done  mainly  by  water,  and  is  very  cheap.  The  population  is  vigorous 
and  intelligent,  although  at  least  95  per  cent,  of  the  men  employed  in  the 
mines  are  of  foreign  birth,  the  greater  number  being  Finns,  Englishmen, 
Austrians,  and  Italians. 

It  may  be  said,  therefore,  that  not  a  single  factor  in  the  working  of 
the  mines  is  unfavorable.  The  inclination  of  the  deposits  is  from  35° 
to  70°,  so  that  in  following  the  ore  shoots  the  shafts  become  enormously 
deep,  several  of  them  being  in  the  neighborhood  of  a  mile  vertically  below 
the  surface.  This  means,  of  course,  an  unusual  expense  for  hoisting  and 
increasing  difficulty  in  working  as  compared  with  mining  at  ordinary 
depths,  but  it  indicates  the  remarkable  persistence  of  the  orebodies. 
Under  present  conditions  the  total  cost  of  mining  these  ores  and  market- 
ing the  copper  is  from  $2  to  $3  per  ton. 

Plants  Required  and  their  Cost. — To  elaborate  a  little  on  the  business 
aspects  of  the  process  of  obtaining  the  copper  we  may  group  the  plants 
required  as  follows: 

1 .  The  mining  plants  for  hoisting,  pumping,  compressing  air,  crushing 
etc. — These  plants  are  always  owned  by  the  mining  companies  themselves. 
Unfortunately  I  am  not  able  to  get  the  cost  of  these  plants,  segregated 
from  other  plant  charges,  in  a  single  instance. 

2.  The  transportation  of  ore  to  the  mills. — This  is  invariably  done  by 
railroad.     The  Copper  Range  Company  had  to  provide  this  equipment 
for  three  mines  which  in  1906  had  reached  an  output  of  1,828,000  tons 
and  are  likely  to  average  2,000,000  tons  a  year.     The  cost  of  the  Copper 
Range  Railroad  was,  including  working  capital  and  equipment,  $6,500,000. 
This  road  serves  a  number  of  other  mines  and  a  considerable  territory 
outside  the  Copper  Range  group.     Nevertheless  it  seems  fair  to  charge 
half  of  it  to  those  mines,  so  that  we  may  figure  $1.60  per  annual  ton 
for  their  transportation  capital. 


LAKE  SUPERIOR  COPPER  MINES  225 

3.  The  concentrating  mills. — The  cost  of  these  is  invariably  bound 
up  with  that  of  the  mine  equipment  and  development.  We  may  as 
well  stop  to  consider  1  and  3  together: 

The  Copper  Range  Mines  had  to  raise  the  following  sums  for  develop- 
ment and  mine  and  mill  equipment  before  they  became  self-sustaining. 

Baltic $    800,000 

Trimountain 1,200,000 

Champion 1,475,000 


Total $3,475,000 

for  an  annual  output  of  say  2,000,000  tons,  equal  to  a  plant  charge  of 
$1.75  per  ton  of  ore  stamped  annually. 

The  Wolverine  Mine  paid  for  its  mining  and  milling  plants  and 
development,  if  I  understand  the  report  correctly,  $780,000;  providing 
capacity  for  mining  and  milling  350,000  tons  a  year,  equal  to  $2.20  per 
annual  ton. 

The  Mohawk  Mining  Company  spent  $1,350,000  to  provide  itself 
with  mining  and  milling  facilities  for  an  output  of  675,000  tons,  equal  to 
$2.00  per  annual  ton.  Its  Traverse  Bay  Railroad  went  in  with  the  mine 
itself,  apparently,  at  a  valuation  of  $450,000,  or  about  70  cents  per 
annual  ton. 

Returning  to  the  Copper  Range  and  adding  together  the  initial  cost 
of  railroad  and  mining  plants  we  get  a  total  of  $6,800,000  or  $3.40  per 
annual  ton. 

4.  The  smelting  plants  for  converting  the  concentrates  or  mineral  into 
ingot  copper. — These  plants  are  usually  owned  by  groups  of  mines  in  com- 
mon. The  Michigan  Smelting  Company,  with  works  capable  of  turning 
out  90,000,000  Ib.  refined  copper  a  year,  which  represents  the  yield  of 
about  4,500,000  tons  of  ore  from  the  mines,  is  capitalized  at  $500,000, 
probably  its  cost.  This  is  equal  to  only  11  cents  per  ton  of  rock  mined. 

Companies  that  have  complete  mining,  milling,  transportation, 
and  smelting  facilities  of  their  own  are  the  Quincy  and  Calumet  &  Hecla. 
The  former  states  that  its  total  cost  for  plant,  including  railroads,  ware- 
house, real  estate,  smelting,  mining,  and  milling  plants  is  $6,300,000. 
The  annual  tonnage  stamped  is  not  given,  but  is  approximately  1,100,000, 
giving  a  total  plant  cost  of  nearly  $6  per  annual  ton.  The  Calumet  & 
Hecla  gives  the  complete  cost  of  all  its  plants  at  between  fifteen  and 
sixteen  million  dollars,  with  an  annual  output  of  2,500,000  tons,  equal 
to  $6  +  per  annual  ton. 

In  round  numbers,  I  think  we  may  say  that  the  minimum  plant  cost 
per  annual  ton  is  $3  for  the  most  favorably  situated  amygdaloid  mine 
and  $6  for  a  conglomerate  mine.  In  each  case  the  working  is  conducted 
on  a  grand  scale. 

While  the  Michigan  mines  are  all  remarkably  long  lived  it  does  not 
seem  proper  to  reckon  on  anything  less  than  a  7  per  cent,  annual  instal- 


226  THE  COST  OF  MINING 

ment  to  cover  the  amortization  of  capital  so  invested.  The  corollary 
is  that  the  use  of  capital  is  worth  from  21  to  42  cents  per  ton  of  output, 
or  at  the  very  least  1  cent  per  pound  of  copper. 

Cost  of  Smelting. — Professor  L.  S.  Austin  reports  (Mining  and 
Scientific  Press,  April  24,  1909)  the  costs  of  the  Lake  Superior  Smelting 
Company  for  1906  as  follows: 

41,177  tons     mineral"  (concentrates)  producing  55,526,088  pounds  fine  copper. 

Per  ton 
concentrates 


Reverberatory  operating  

$195,144 

$4  741 

Miscellaneous 

43  409 

1  055 

Construction  

15.665 

0  380 

Blast-furnace  operating  
Miscellaneous  .  . 

32^623 
13.461 

0.790 
0.327 

Total $300,302         $7 . 293 

Dividing  the  total  cost  by  the  pounds  of  copper  we  get  0.541  cents 
as  the  cost  of  smelting  per  pound. 

It  appears  that  to  this  must  be  added  about  J£  cent  per  pound  for 
freight  for  market  and  marketing  expense,  so  that  the  total  cost  for 
smelting,  refining,  and  marketing  is  a  little  over  1  cent  per  pound  refined 
copper. 

Nature  of  the  Deposits. — While  in  a  broad  sense  the  conditions  are 
rather  uniform  throughout  the  district,  there  are  three  fairly  well  marked 
types  of  deposits  whose  characteristics  impose  certain  differences  of 
method  and  cost.  One  is  the  conglomerate,  of  which  the  only  com- 
mercially valuable  deposit  is  the  great  ore  shoot  worked  by  the  Calumet 
&  Hecla  and  the  Tamarack  mines.  This  has  already  produced  in  the 
neighborhood  of  1,100,000  tons  of  fine  copper  from  more  than  40,000,000 
tons  of  ore,  and  there  remains  in  sight  probably  20,000,000  tons  more. 
This  magnificent  orebody  is  about  14  feet  thick;  it  dips  at  an  angle  of 
37°,  and  is  a  hard  compact  bed  of  conglomerate  overlaid  by  a  trap  hanging 
wall  of  such  a  character  that  it  requires  timbering. 

The  amygdaloid  deposits  are  rather  numerous  and  have  much  in 
common.  There  is,  however,  an  important  distinction  between  that  of 
the  Copper  Range  Consolidated  Company  and  the  other  amygdaloid 
mines.  The  ordinary  amygdaloids  (represented  by  the  Wolverine  on  the 
Kearsarge  lode  and  by  the  Quincy  mine)  either  are,  or  are  assumed  to  be, 
homogenous,  in  that  all  of  the  vein  stuff  is  sent  to  the  mill  with  a  very 
moderate  amount  of  sorting  at  the  surface.  These  deposits  have  yielded 
from  a  minimum  of  12  Ib.  to  a  maximum  of  50  Ib.  of  copper  to  the  ton. 
The  rock  is  softer  than  the  conglomerate,  and  is  more  easily  milled.  The 
hanging  wall  is  generally  firm,  so  that  in  most  cases  mining  can  be  done 
without  any  timbering. 

The  amygdaloid  of  the  Copper  Range  Consolidated  Company  on  the 
Baltic  lode  is  somewhat  different.  The  rock  is  harder  than  the  ordinary 


LAKE  SUPERIOR  COPPER  MINES  227 

and  the  copper  is  very  apt  to  be  attached  to  numerous  small  fissures  that 
traverse  the  bed.  The  result  of  this  distribution  of  value  has  been  the 
development  of  an  entirely  distinct  type  of  underground  mining,  based  on 
a  system  of  sorting  waste  out  of  the  vein  itself  and  leaving  this  waste  in 
the  stopes  for  filling. 

The  Wolverine  Mine. — Of  these  various  types  the  simplest  is  the  kind 
of  amygdaloid  mine  represented  by  the  Wolverine.  This  property  in 
common  with  all  others  of  the  Stanton  group  is  very  well  managed  and 
issues  clear  and  excellent  reports.  The  entire  process  of  mining  and  realiz- 
ing copper  at  this  mine  is  simple.  The  vein  averages  about  15  ft.  thick. 
It  dips  at  an  angle  of  about  37°;  no  timbering  whatever  is  required  but  a 
few  small  pillars  are  left.  The  shafts  are  sunk  mainly  in  the  vein  itself, 
but  partly  in  the  foot- wall  a  few  feet  back  from  the  vein.  Levels  are 
run  at  distances  of  100ft.  and  are  opened  by  what  are  called  "stope  drifts," 
these  being  a  complete  section  of  the  vein  25  ft.  wide  along  the  plane  of 
the  footwall.  The  cost  of  running  these  drifts  is  $5.68  per  foot  in  excess 
of  the  cost  of  stoping  an  equivalent  amount  of  ground. 

In  the  stopes  themselves,  nothing  is  done  except  to  break  the  ore  with 
machines.  Once  broken  the  ore  is  caught  on  a  low  platform  built  at  the 
bottom  of  the  stope  from  which  the  ore  is  partly  rolled  and  partly  shoveled 
into  the  cars.  This  completes  the  mining  process.  The  cost  of  the 
underground  work  is  less  than  $1  a  ton;  7  cents  a  ton  is  added  for  crushing 
and  sorting  in  the  rock  house  at  the  surface.  Transportation  to  the  mill 
costs  about  16  cents  a  ton  and  concentration  about  22  cents.  General 
expenses  such  as  superintendence,  taxes,  and  insurance,  etc.,  amount  to 
about  22  cents  more;  and  smelting,  refining,  and  marketing  about  29 
cents,  making  a  total  of  operating  expenses  of  $1.84.  Construction  work 
for  the  last  four  years  has  averaged  8  cents,  and  the  total  expenses  with 
construction  for  the  same  period  have  averaged  $1.92. 

It  is  to  be  noticed  that  in  this  mine  the  exploration  work  is  reduced 
nearly  to  zero.  The  whole  operation  is  a  straight,  uncomplicated  matter 
of  handling  so  much  material;  and  to  the  handling  of  it  nature  has  inter- 
posed as  few  obstacles  as  can  be  found  in  any  underground  mine.  There 
is  very  little  water  to  pump;  there  are  no  complex  vein  systems  to  work  out, 
no  faults  to  interrupt  the  vein,  and  no  geological  relations  to  be  under- 
stood. There  is  always  abundant  room  to  work,  good  ventilation,  com- 
paratively soft  ground,  and  no  timbering.  While  it  cannot  be  denied  that 
the  Wolverine  is  a  well-managed  property  which  has  kept  notably  clear 
from  extravagant,  impractical  projects  of  all  kinds,  it  seems  fair  to  say 
that  the  low  costs  obtained  by  it  are  not  in  any  way  extraordinary,  but 
merely  the  inevitable  result  of  common-sense  methods  applied  to  a 
favorable  set  of  conditions. 

The  accompanying  table  gives  such  details  as  are  published  of  the 
cost  of  mining  in  the  Wolverine.  It  is  to  be  noticed  that  the  Wolverine 
is  at  present  the  richest  of  all  amygdaloid  mines  and  that  for  this  reason 


228 


THE  COST  OF  MINING 


the  cost  for  smelting  is  higher  than  that  of  any  of  the  other  mines  of  its 
class. 

WOKKING  EXPENSES  AT  THE  WOLVERINE  MINE,  YEAR  ENDING  JUNE  30,  1907. 

Per  ton 

UNDERGROUND  EXPENSES  (Rock  Stamped  344,062  Tons) — 

Sinking  450  ft.  at  $17.88 $8,046 . 00 

Drifting  4,993  ft.  at  $5.68 28,385.80 

Stoping  23,175  fathoms  at  $7.69 178,269.70 

Labor 1,546.55 

$216,248.05 

Timbering 5,286.60 

Tramming 71,603.15 

Mining  captains  and  labor 29,151 . 80 

Mechanics 7,833 . 15 

Hoisting  and  pumping 22,092 . 51 

Compressor 29,774. 52 

Teaming,  etc 1,095.95 

Supplies  and  fuel 19,107.47 

Electric  light 291 . 88 

$402,584.98 
Less  profit  on  supplies  furnished  contractors 65,416.00 

$337,168.98      $0.98 

ROCK  HOUSE — 

Labor $13,371 .85 

Machinists 1,166.28 

Fuel 2,160.00 

Supplies 3,621 . 29 

Teaming,  etc 808 . 30 

Electric  light 1,167. 12 

22,294.84        0.065 

STAMP  MILL — 

Transportation $55,053 . 35 

Supplies  and  electric  light 9,918. 72 

Machinists 4,318.90 

Fuel  and  teaming 26,816 . 00 

Labor 27,632.80 

Pumping 7,599. 78 

131,339.55        0.38 

SURFACE  AND  INCIDENTAL  EXPENSES — 

Superintendence  and  labor $20,309.57 

Supplies 9,523 . 51 

Telephone,  telegrams,  and  sundries 495 . 28 

Taxes  and  insurance 48,938. 14 

Freight  on  mineral,  etc 5,948 . 28 


$85,215.18 


LAKE  SUPERIOR  COPPER  MINES 


229 


Less  amounts  received  for  rents . . 


Construction  average  of  four  years 

Amortization  of  $780,000  at  5  per  cent,  in- 
terest and  3  per  cent,  annual  amortization 
Smelting,  refining,  and  marketing 


6,547.90 


78,667.28         0.223 


$569,470.65 


Total. 


$1.648 
0.08 

0.20 
0.284 

$2.212 


Average  cost  of  copper  in  New  York,  7.93  cents  per  pound. 

The  amortization  in  this  case  includes  the  purchase  price  of  the  property, 
tem  is  not  distinguished  from  the  capital  invested  in  equipment. 


This 


The  fore-going  shows  the  aspect  of  this  industry  in  1909.  For  the 
later  history  it  seems  better  to  refer  to  the  groups  of  mines  under  the 
management  of  the  Calumet  &  Hecla  for  which  excellent  reports  are 
now  to  be  had.  A  summary  of  the  results  of  all  the  profitable  mines  in 
the  district  for  the  years  1906 — 1910  inclusive  is  given. 

Ahmeek. — The  Wolverine  mine  is  now  on  the  decline.  The  property 
in  which  the  general  conditions  most  closely  resemble  it  is  the  Ahmeek. 
It  will  be  noted  that  the  costs  in  1913  were  very  much  higher  than  the 
average. 

COMPAKATIVE  RESULTS  FOR  THE  FOUR  YEARS 


1910 

1911 

1912 

1913 

Tons  of  rock  treated       .      ... 

530,365 

598,549 

652,260 

383  749 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  ton  of 
rock 

$1  42 

$1  42 

$1  39 

$1  77 

Pounds  of  mineral  obtained  
Pounds  of  refined  copper  pro- 
duced               

16,758,521 
11,844,954 

21,917,925 
15,196,127 

23,945,315 
16,455,769 

13,742,140 
9,220  874 

Per  cent,  of  refined  copper  in 
mineral 

70  68 

69  33 

68  72 

67  10 

Pounds  refined  copper  per  ton 
of  rock  treated 

22.3 

25  4 

25  2 

24  0 

COST  PER  POUND: 
Mining  expense       

7.93c. 

5.61c. 

5  51c. 

7  38c 

Construction 

1.85c. 

0  32c. 

1  20c 

4  53C 

Smelting,  freight,  commissions, 
eastern  office  etc.  

1.16c. 

1  .  19c. 

1  14c. 

1  39c 

Interest 

0  lie. 

0  05c. 

0  OOc 

0  OOc 

Total  cost  per  pound  refined 
copper 

ll.OSc. 

7  71c 

7  85c 

13  30c 

230 


THE  COST  OF  MINING 


COMPARATIVE  RESULTS  FOR  THE  PAST  FOUR  YEARS 


1915 

1916 

1917 

1918 

Tons  of  rock  treated 

948,874 

1,164,010 

1,271,275 

1,196,541 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  tori  of 
rock  
Pounds  of  refined  copper  pro- 
duced   

$1.26 
21,800,492 

$1.46 
24,142,158 

$1.74 
28,919,812 

$2.18 
24,851,235 

Pounds  refined  copper  per  ton  of 
rock  treated  

23.0 

20.7 

22.0 

20.8 

This  was  due  to  a  labor  strike.  In  this  mine  it  may  be  computed  that  the 
development  work  required  is  only  1  ft.  to  87  tons.  The  dividends  paid 
in  the  period  covered  by  the  statements  amount  to  $11,250,000  from 
about  165,000,000  pounds,  nearly  7  cents  a  pound. 


UNDERGROUND  WORK  FOR  THE  PAST  FOUR  YEARS 


1915 

1916 

1917 

1918 

Sinking  No. 

1  shaft 

ft 

27 

186 

80 

0 

Sinking  No. 

2  shaft, 

ft.      . 

82 

196 

289 

119 

Sinking  No. 
Sinking  No. 

3  shaft, 
4  shaft, 

ft  
ft. 

66 
0 

263 
161 

263 
332 

202 
122 

Total 

175 

806 

964 

443 

1915 

1916 

1917 

1918 

Openings  No.  1 
Drifting,  ft.  .  . 

shaft, 

478 

1,605 
913 
0 

2,943 
14 
0 

2,641 
0 
0 

2,000 

2,238 
2,262 
0 

3,154 
0 
231 

2,935 

28 
0 

1,895 

4,058 
663 
0 

3,364 
38 
0 

6,067 
0 
0 

1,869 

3,881 
468 
101 

1,788 
0 
0 

4,932 
22 
24 

Openings  No.  2 
Drfting,  ft.  .  . 

shaft, 

Crosscutting, 
Fork  ft 

ft  

Openings  No.  Sshaft 
Drifting  ft. 

Fork,  ft  
Crosscutting, 
Openings  No.  4 
Drifting,  ft.  . 
Fork,  ft  

ft. 

shaft, 

Crosscutting, 
Total 

ft  

8,594              12,848 

16,085             13,085 

LAKE  SUPERIOR  COPPER  MINES 


231 


Allouez  Mining  Company. — Although  this  is  an  old  mine  it  never 
paid  any  dividends  until  1915.  Since  then  it  has  paid  $2,850,000  from 
an  output  of  36,000,000  pounds,  8  cents  a  pound,  indicating  complete 
costs  of  about  15  cents  a  pound.  The  production  cost  per  pound  in  1918 
were  mining  15.45  cents.,  smelting  refining  and  marketing  1.47  cents: 
total  16.92  cents. 

COMPARATIVE  RESULTS  FOR  THE  PAST  FOUR  YEARS 


• 

1915 

1916 

1917 

1918 

Tons  of  rock  treated  

534,705 

566,960 

566,674 

514,888 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  ton  of 
rock 

$1  365 

$1  589 

$1.869 

$2.119 

Pounds  of  refined  copper  pro- 
duced .  .  . 

10,043,459 

10,219,290 

8,892,915 

7,071,218 

Pounds  refined  copper  per  ton 
treated  

18.78 

180.2 

15.69 

13.73 

UNDERGROUND  WORK  FOR  THE  PAST  FOUR  YEARS 


1915 

1916 

1917 

1918 

Sinking  No.  1 
Sinking  No   2 

shaft,  ft  
shaft  ft 

45 
0 

144 
0 

99 
0 

191 
0 

Total  . 

45 

144 

99 

191 

Openings  No. 

1  shaft,  ft.  .    . 

1,485.5 

1,339.0 

1,594.5 

855.5 

Openings  No. 

2  shaft,  ft  

3,373.0 

2,164.5 

1,243.5 

1,903.0 

Total 

4,858  5 

3,503.5 

2,838.0 

2,758.5 

Total  Depth  of  Shafts 

No.  1  shaft  72  feet  below  22d  level,  3,980  feet  from  surface. 
No.  2  shaft  198  feet  below  21st  level,  3,407.5  feet  from  surface. 

SUMMARY  OF  RESULTS 


1915 

1916 

1917 

1918 

Rock  hoisted,  tons 

535,718 

567,858 

567,459 

515,150 

Rock  house  discard,  tons  

1,013 

878 

785 

262 

Percentage  of  discard  

0.189 

0.158 

0.137 

0.046 

The  Centennial  similarly  has  been  making  a  little  money.  It  pro- 
duced copper  in  1918  for  15.7  cents  a  pound. 

Isle  Royale  Copper  Company. — This  is  an  interesting  case  of  a  mine 
being  operated  60  years  before  it  was  made  to  pay.  Perhaps  I  ought  to 
take  this  fact  as  a  personal  rebuke,  for  I  have  frequently  argued  that  the 


232 


THE  COST  OF  MINING 


value  of  hopes  so  long  deferred  might  be  put  down  at  zero.  I  suppose 
the  fact  that  the  mine  pays,  and  shows  no  apparent  signs  of  failing  to  do 
so,  is  due  to  the  good  management  of  the  group  of  men  now  in  charge. 

In  eight  years  132,000  feet  of  shafts  and  drifts  were  opened  for  about 
6,400,000  tons  of  rock  hoist,  1  ft.  to  49  tons.  Half  of  this  work  was  done 
for  the  first  third  of  the  output.  I  imagine  that  doing  this  was  what  made 
the  mine  pay. 

In  1918  the  cost  of  producing  copper  was  only  13.49  cents  for  mining 
and  1.58  cents  for  smelting,  15.07  cents  altogether.  That  was  pretty 

COMPARATIVE  RESULTS  FOR  THE  FOUR  YEARS 


1910 

1911 

1912 

1913 

Tons  of  rock  treated  .... 

520,860 

457,440 

531,105 

314  679 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  ton  of 
rock  

$1  42 

$1.47 

$1.54 

$2.12 

Pounds  of  mineral  obtained  
Pounds  of  refined  copper  pro- 
duced   

10,433,060 
7,567.399 

10,339,171 
7,490,120 

11,461,410 
8,186,957 

5,887,000 
4,158,548 

Per  cent,  of  refined  copper  in 
mineral  
Pounds  refined  copper  per  ton  of 
rock  treated  

72.53 
14  5 

72.44 
16.4 

71.43 
15.4 

70.64 
13.2 

Cost  per  pound: 
Mining  expense.  . 

9  75c. 

8  97c. 

10  Olc. 

16  07c. 

Construction  
No.  7  shaft 

0.16c. 
0  OOc. 

0.25c. 
0  OOc. 

0.20c. 
0  15c. 

0.73 
0  27c. 

Shaft  "A"  and  explorations.  . 
Unwatering  Huron  mine  
Smelting,  freight,  commissions, 
eastern  office,  etc  
Interest  . 

0.33c. 
O.OOc. 

1.26c. 
0  34c. 

0.07c. 
0.06c. 

1.21c. 
0  29c. 

O.OSc. 
O.OSc. 

1.31c. 
0  09c. 

O.Olc. 
O.lOc. 

1.53c. 
0  lOc. 

Total   cost   per   pound   refined 
copper  

11.84c. 

10.85c. 

11.89c. 

18.81c. 

COMPARATIVE  RESULTS  FOR  THE  PAST  FOUR  YEARS 


1915 

1916 

1917 

1918 

Tons  of  rock  treated  

680,280 

925,419 

922,160 

974,508 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  ton  of 
rock 

$1  45 

$1  53 

$2  02 

$2  14 

Pounds  of  refined  copper  pro- 
duced 

9  342  106 

12412  111 

13  480  921 

15  442  508 

Pounds  refined  copper  per  ton  of 
rock  treated 

13  7 

13  4 

14  6 

15  9 

LAKE  SUPERIOR  COPPER  MINES 


233 


good  for  1918.  The  total  cost  per  ton  milled  was  $2.40.  Since  1913, 
$1,950,000  has  been  paid  from  about  58,000,000  pounds  of  copper,  some 
3.5  cents  per  pound.  An  equal  amount  was  added  to  quick  assets. 


1915 

1916 

1917 

1918 

Rock  hoisted  tons 

799  890 

1  144  310 

1  200  975 

1  187  486 

Rock  house  discard,  tons  
Percentage  of  discard 

119,620 
15  0 

218,891 
19  1 

278,815 
23  2 

212,978 
17  9 

Osceola  Consolidated. — The  Osceola  Cons.  Mining  Company  works 
some  large  amygdaloid  mines  near  the  Calumet  &  Hecla. 

ABSTRACT  OF  THE  REPORTS  OF  THE  OSCEOLA  MINING  Co. 
The  following  table  gives  the  comparative  results  for  1906,  1907  and  1908. 


1906 

1907 

1908 

Tons  rock  stamped  
Pounds  mineral  obtained 

1,016,240 

24,227,281 

811,603 
18,607,747 

1,241,400 
26,912,944 

Percentage       refined      copper       in 
mineral                              

76  725 

75  .  962 

78.961 

Pounds  refined  copper  per  ton  of  rock 
stamped                           

18  3 

17.4 

17.1 

Product  fine  copper 

18  588  451  Ib. 

14,134,753  Ib. 

21,250,794  Ib. 

Cost  per  pound  at  mine,  excluding 
construction 

8  73  cents 

10  59  cents 

8  .  74  cents 

Cost  per  pound  construction  
Cost  per  pound  of  smelting,  freights, 
eastern     expenses,     commissions, 
and  all  other  charges         

0  .  84  cents 
1  .  32  cents 

0.60  cents 
1  .  25  cents 

0  .  69  cents 
1  .  10  cents 

Total   cost    per    pound    of    refined 
copper                                      

10  89  cents 

12.44  cents 

10.53  cents 

Cost  of  mining  and  stamping  per  ton 
of  rock  stamped  
Gross  cost  of  stamping  per  ton  
Net  cost  of  stamping  per  ton  after 
deducting  profit  on  custom  rock  .  . 

$1.60 
16.39  cents 

13.83  cents 

$1.84 
17  .  47  cents 

11.71  cents 

$1.50 
15.78  cents 

13  .  34  cents 

From  the  above,  it  appears  that  the  total  costs  per  ton  for  1908  were 
$1.80  as  compared  with  $2.16  in  1907,  and  $1.99  in  1906.  This  rise  and 
fall  of  cost  was  an  experience  the  company  shared  with  nearly  all  other 
mining  companies  during  this  period. 

The  reports  state  that  the  old  Osceola  mine  shows  large  reserves  of 
copper  towards  the  south  end,  the  northerly  shafts  being  more  nearly 
worked  out.  At  the  North  Kearsarge  mine  No.  1  shaft  was  damaged  by 
fire  in  September,  1906,  and  repaired  at  a  cost  of  $36,950.  This  was 


234 


THE  COST  OF  MINING 


charged  to  operating  expenses.  The  report  contains  little  additional 
information  of  interest. 

The  total  dividends  to  date  are  $7,612,550.  Dividends  since  the 
beginning  of  1901  have  been  $3,942,150  from  an  output  of  136,584,911 
lb.,  equal  to  a  trifle  less  than  3  cents  a  pound.  Lake  copper  in  the  same 
period  averaged  15.57  cents  in  price.  It  appears  from  this  that  the  copper 
has  averaged  some  12.5  cents  in  cost,  including  everything. 

The  company  has  been  absorbed  by  the  Calumet  &  Hecla. 

At  this  mine  the  proportion  of  development  work  to  ore  treated  is 
extraordinarily  small.  For  four  years  it  was  only  1  ft.  to  200  tons. 
This  mine  paid  $17,371,000  in  dividends  in  forty  years  1878-1918 
inclusive. 

COMPARATIVE  RESULTS  FOR  THE  FOUR  YEARS 


1910 

1911 

1912 

1913 

Tons  of  rock  treated  

1.217,720 

1,246,596 

1,246,557 

735,044 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  ton  of 
rock  

$1.28 

*$1.14 

t$1.23 

t$1.60 

Pounds  of  mineral  obtained  
Pounds   of   refined   copper   pro- 
duced 

25,669,913 
19,346,566 

24,452,912 
18,388,193 

24,282,312 
18,413,387 

14,945,645 
11,325,010 

Per   cent   of   refined    copper   in 
mineral 

75  367 

75  198 

75  830 

75.775 

Pounds  refined  copper  per  ton 
rock  treated 

15  9 

14  8 

14  8 

15.4 

Cost  per  pound: 
Expenses  at  mine 

8  04  c. 

7  73  c. 

8  34  c. 

10.39  c. 

Construction          

0  35  c. 

0  49  c. 

0.95c. 

0.77  c. 

Smelting,  freight,  commissions, 
eastern  office  etc 

0  98  c. 

1  06  c. 

1  .  07  c. 

1.14  c. 

Total    cost    per    pound    refined 
copper  

9.37c. 

9.28c. 

10.36c. 

12.30c. 

COMPARATIVE  RESULTS  FOR  THE  PAST  FOUR  YEARS 


1915 

1916 

1917 

1918 

Tons  of  rock  treated  

1,361,089 

1,284,681 

1,237,805 

1,194,967 

Cost  of  mining,  transportation, 
stamping  and  taxes  per  ton  of 
rock  
Pounds   of   refined   copper   pro- 
duced   

$1.18 
19,731,472 

$1.36 
19,586,501 

$1.63 
16,084,958 

$1.78 
15,919,647 

Pounds  refined  copper  per  ton 
rock  treated  

14.5 

15.2 

13.0 

13.3 

LAKE  SUPERIOR  COPPER  MINES  235 

Baltic  Lode  (1908). — The  second  type  of  amygdaloid  deposits,  repre- 
sented by  the  Baltic,  Trimountain,  and  Champion  mines  of  the  Copper 
Range  Consolidated  Company,  presents  a  more  difficult  problem  in  operat- 
ing. The  Baltic  lode  has  a  dip  of  about  70°.  Its  hanging  wall  is  insecure 
so  that  it  will  not  stand  for  any  considerable  area  without  support. 
Moreover,  the  vein  is  wide,  sometimes  as  much  as  50  ft.,  and  the  vein  stuff 
has  more  the  appearance  of  trap  than  the  ordinary  amygdaloid.  The 
great  width  of  the  vein  would  in  many  cases  make  the  leaving  of  pillars 
to  support  the  hanging  wall  a  very  expensive  and  doubtful  expedient. 

Mining  on  this  lode  by  the  ordinary  methods  used  for  amygdaloid  de- 
posits was  a  failure.  The  whole  vein  had  to  be  mined  in  order  to  find 
the  copper  which  was  scattered  somewhat  irregularly  through  the  mass; 
but  the  whole  vein  proved  to  be  too  low  grade  to  pay.  It  would  yield 
only  about  14  Ib.  copper  to  the  ton.  F.  W.  Denton  solved  the  problem 
approximately  as  follows:  The  vein  as  a  whole  yielded  in  the  mill  14  Ib. 
copper  and  probably  contained  six  additional  pounds  of  copper  that  were 
lost  in  the  milling  process.  By  picking  out  waste  or  low-grade  ore  in  the 
mine  it  was  found  that  40  per  cent,  that  would  run  no  better  than  the 
mill  tailings  could  be  rejected.  This  selection  yielded  the  following 
results:  100  tons  mined  contained  2000  Ib.  copper;  40  tons  were  re- 
jected containing  240  Ib.,  this  left  60  tons  of  material  containing  1760 
Ib.  of  copper  or  29  Ib.  to  the  ton.  This  when  sent  to  the  mill  and  treated 
with  a  loss  of  7  Ib.  in  the  tailings  yielded  22  Ib.  per  ton  milled  as  against 
14  Ib.  obtained  before. 

Logically,  this  process  means  additional  expense  as  follows:  100  tons 
of  rock  would  have  to  be  broken  and  only  60  tons  realized.  If  to  break 
the  whole  vein  cost  40  cents  a  ton,  the  breaking  of  the  60  tons  recovered 
must  cost  67  cents  per  ton.  This  represents  about  the  measure  of  addi- 
tional expense  involved  in  the  selection  process.  The  coarse  waste  picked 
out  underground  can  be  piled  back  as  easily  as  it  can  be  shoveled  into  cars 
by  the  ordinary  process  and  taken  to  the  shaft.  Indeed,  it  is  possible 
that  an  actual  saving  is  effected  in  tramming  by  the  use  of  this  system 
because  it  is  easier  to  get  the  rock  into  a  chute  than  it  is  to  shovel  it  into 
a  car,  and  the  tramming  of  the  rock  from  the  chute  to  the  shaft  is  practi- 
cally as  cheap  as  it  would  be  to  push  the  cars  to  the  shaft  after  they  were 
loaded  by  hand. 

Peculiarities  of  Sorting  and  Filling  Method. — This  method  of  filling 
the  stopes  by  rock  sorted  from  the  vein  itself  is  a  novelty  in  Lake  Superior 
though  not  in  the  mines  of  the  West.  Since  it  was  developed  independ- 
ently by  Mr.  Denton,  it  resulted  in  one  or  two  points  of  practice  different 
from  that  employed  anywhere  else. 

The  rock  sorted  from  the  vein  is  hard  and  rough,  and  this  fact  has 
been  taken  advantage  of  in  building  up  stone  walls  on  the  levels  instead 
of  using  timbered  drifts.  These  stone  walls  are  covered  with  large 
timbers  and  lagging  and  then  the  whole  thing  is  covered  with  the  waste 


236  THE  COST  OF  MINING 

filling.  It  is  found  that  stone  walls  resist  the  pressure  of  the  accumulat- 
ing filling  very  much  better  than  any  timber,  and  in  fact  maintain  them- 
selves in  perfect  condition  as  long  as  they  are  required.  The  mill  holes 
leading  through  the  waste  to  the  working  faces  at  the  top  instead  of  being 
built  of  wooden  cribbing  are  circular  wells  laid  in  stone.  In  building 
the  walls  on  the  main  levels  and  in  the  mill  holes,  advantage  has  been 
taken  of  the  presence  of  Italian  and  Austrian  miners  who  usually  have 
had  expeience  in  laying  stone  walls  in  their  own  country.  The  total 
result  is  a  very  pretty  adaptation  of  methods  to  the  natural  conditions. 

The  results  in  dollars  and  cents  obtained  by  this  method  are  all,  and 
rather  more,  than  could  be  expected.  As  compared  with  the  Wolverine 
we  find  that  in  1905  the  underground  costs  at  the  Baltic  were  $1.04  a 
ton,  and  in  1906,  $1.06  a  ton,  against  $0.93  and  $0.98,  respectively,  at 
the  Wolverine,  a  difference  of  about  10  cents  a  ton  as  against  the  27 
cents  increase  that  we  might  have  expected.  The  Copper  Range  mines 
are,  however,  less  than  1000  ft.  deep,  while  the  Wolverine  will  average 
more  than  2000  ft.;  so  that  the  former  gets  some  advantage  in  costs  on 
this  account. 

There  are  certain  advantages  in  the  sorting  and  filling  system  over 
and  above  mere  availability.  These  are:  (1)  The  security  of  the  mine; 
(2)  the  fact  that  no  pillars  need  be  left  for  any  reason,  unless,  indeed, 
the  shafts  are  sunk  in  the  vein  in  which  case  it  is  always  necessary  to 
leave  some  ground  on  each  side  of  the  shaft;  (3)  the  system  completely 
solves  the  question  of  exploring  the  vein  for  its  copper  contents  enough 
ground  can  always  be  taken  to  expose  stringers  and  bunches  running  into 
the  walls. 

Costs  at  Copper  Range  Mines. — Outside  of  the  operations  in  the  mine 
itself,  the  Copper  Range  Company  does  its  business  much  as  other  amyg- 
daloid mines  do;  whatever  further  economies  it  achieves  are  entirely 
due  to  mechanical  reasons  and  the  volume  of  material  handled  and  not  to 
difference  in  the  method.  The  accompanying  table  gives  the  results 
obtained  in  recent  years. 


LAKE  SUPERIOR  COPPER  MINES  237 

COSTS  OP  MINES  OP  THE  COPPER  RANGE  CONSOLIDATED  COMPANY  1906 


Baltic 

Champion 

Trimountain 

Tons  stamped  

649,932 

671,785 

506,942 

Superintendence  and  labor  

Per  ton 
$0.79 

Per  ton 
$.086 

Per  ton 
$1.05 

Rock  house  
Hoisting 

0.07 
0  06 

0.10 
0  05 

0.08 
0  09 

Power  drills  

0  06 

0.07 

0.07 

Timber  and  supplies 

0  15 

0  16 

0.14 

Surface  costs 

0  06 

0  08 

0  07 

Transportation  to  mill  

0  17 

0.14 

0.11 

Stamping  

0.18 

0.22 

0.21 

Smelting  refining  and  marketing 

0  25 

0  32 

0.23 

Total  operating  

1.79 

2.00 

2.05 

Taxes 

0  70 

0  09 

0.08 

Construction,  estimated  average  

0.10 

0.10 

0.10 

Average  current  costs  

1.96 

2.19 

2.23 

10,000,000  tons  to  be  mined  in  26  years  from 
time  of  investment  at  5  per  cent,  interest 
and  2  per  cent,  amortization       

0  15 

0.27 

0.22 

Recent  yield  copper  per  ton 

S2.ll 
22  Ib. 

$2.46 
25  Ib. 

$2.45 
19  Ib. 

Current  cost  copper  per  Ib  

9  cents 

8%  cents 

11.7  cents 

Cost  of  copper  per  pound,  complete 

93^  cents 

9%  cents 

12%  cents 

Pounds 

Cost 

Per  pound 
cents 

Baltic 

63,211,963 

$5,808,000 

9.19 

Champion  

66,938,611 

6,512,000 

9.74 

Trimountain                                               .  . 

34,210,014 

4,172,000 

12.2 

164,360,588 

$16,492,000 

10.00 

It  seems  proper  to  say  that  10  cents  per  pound  is  the  true  dividend 
cost.  Figuring  on  averages  these  mines  would  appear  to  be  able  to 
produce  41,000,000  Ib.  a  year  at  a  profit  of  5.5  cents.  The  Copper  Range 
Company  owns  one-half  the  stock  of  the  Champion  and  practically  all 
the  stock  of  the  other  mines,  together  with  the  Copper  Range  Railroad. 
The  railroad  does  not  earn  much.  We  may  estimate  the  total  average 
earnings  of  the  company  at  15^-cent  copper  at  $1,750,000  per  year, 
equal  to  some  $4.55  per  share.  Conceding  that  this  average  can  be 
maintained  for -twenty  years  we  may  estimate  a  value  of  $57  a  share. 


238 


THE  COST  OF  MINING 


COPPER  RANGE  COMPANY 

COMPARATIVE  STATEMENT 
(Baltic,  Trimountain  and  one-half  Champion  combined.) 


1918 

Average  for  ten 
years,  1909  to 
1918  inclusive 

Tons  of  rock  stamped  

792  151 

1  161  775 

Pounds  of  refined  copper  produced  

26,623,940 

29  483  340 

Pounds  of  refined  copper  per  ton  stamped  
Cost  of  copper  per  pound  

33.61 
$0  1446 

25.38 
$0  1033 

Price  received  per  pound 

0  2476 

0  1824 

Profit  per  pound  

0  1030 

0  0791 

Mining  expense,  smelting,  freight,  marketing  copper, 
etc               

$3,849,216  38 

$3  045  764  49 

Net  earnings  Copper  Range  Company  

2,895,615  28 

2,333  045  60 

Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 
Dividends 


paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 
paid  in 


1905. 
1906. 
1907. 
1908. 


$1,536,086.00 

2,304,810.00 

2,304,810.00 

1,536,740.00 

1909 1,536,930.00 

1910 1,537,340.00 

1911 ' 1,357,104.00 

1912. . 788,428.50 

1913 , 1,084,498.00 

1915 1,182,003.00 

1916 3,941,648.00 

1917 3,943,912.50 

1918 2,366,394.00 


Total  dividends  paid  to  December  31,  1918 $25,420,704.00 


CHAMPION  COPPER  COMPANY 

Statement  of  Receipts  and  Expenditures  from  Date  of  Organization  to  December 

31,  1918. 
Receipts 

Capital  stock $  2,500,000.00 

From  sale  of  copper  (1902)  4,165,784  Ib.  at  11.82  c 492,553.36 

From  sale  of  copper  (1903)  10,565,147  Ib.  at  13.37c 1,412,711 .43 

From  sale  of  copper  (1904)  12,212,954  Ib.  at  13.02  c 1,591,109.71 

From  sale  of  copper  (1905)  15,707,426  Ib.  at  15.56  c 2,444,554.91 

From  sale  of  copper  (1906)  16,954,986  Ib.  at  19.06  c 3,231,328.71 

From  sale  of  copper  (1907)  16,489,436  Ib.  at  17.28  c 2,848,838.41 

From  sale  of  copper  (1908)  17,786,763  Ib.  at  13.39  c 2,381,137.30 

From  sale  of  copper  (1909)  18,005,071  Ib.  at  13,00  c 2,339,361 . 62 

From  sale  of  copper  (1910)  19,224,174  Ib.  at  12.74  c 2,447,844.73 

From  sale  of  copper  (1911)  15,639,426  Ib.  at  12.54  c 1,960,758. 13 

From  sale  of  copper  (1912)  17,225,508  Ib.  at  16.16  c 2,782,457.60 

From  sale  of  copper  (1913)  12,080,594  Ib.  at  14.89  c 1,798,984. 15 

From  sale  of  copper  (1914)  15,807,206  Ib.  at  13.38  c 2,114,468. 18 

From  sale  of  copper  (1915)  33,407,599  Ib.  at  17.40  c 6,814,279.21 


LAKE  SUPERIOR  COPPER  MINES 


239 


From  sale  of  copper  (1916)  33,601,  136  Ib.  at  25.28  c. . 
From  sale  of  copper  (1917)  27,550,343  Ib.  at  28.735  c. . 
From  sale  of  copper  (1918)  21,748,514  Ib.  at  24.757  c. . 


Total  copper  production,  308,172,067  Ib. 

To  end  of  1915 .225,272,074 

Average  price  15  cents. 

Expenditures 

Real  estate  (Champion  location) 

Real  estate  (lands  since  purchased) 


8,494,367.18 
7,916,569.27 
5,384,208.35 

$57,955,532.25 
$33,660,338 


Net  expenditures  for  construction  and  equipment, 
mining  operations,  smelting  and  marketing  copper 
taxes,  and  incidentals 

Net  balance  of  receipts 

Dividends  paid  in  1903 

Dividends  paid  in  1904 

Dividends  paid  in  1905 

Dividends  paid  in  1906 


$1,025,000.00 
14,095.28 

$1,039,095.28 


30,866,413 . 66      31,905,508 . 94 

$26,050,023.31 

$300,000.00 

200,000.00 

1.000,000.00 

1,200,000.00 


Dividends  paid  in  1907 1,000,000 . 00 


500,000.00 

800,000.00 

900,000.00 

500,000.00 

1,100,000.00 

900,000.00 

Dividends  paid  in  1915 3,100,000. 00 

Dividends  paid  in  1916 6,014,540.96 

Dividends  paid  in  1917 4,480,000.00 

Dividends  paid  in  1918 1,975,720.00 


Dividends  paid  in  1908. 
Dividends  paid  in  1909. 
Dividends  paid  in  1910. 
Dividends  paid  in  1911. 
Dividends  paid  in  1912. 
Dividends  paid  in  1913. 


Excess  of  receipts  over  expenditures 


23,970,260.96 
$2,079,762.35 


Dividends  to  end  of  1915,  $11,500,000  equal  to  5.11  cents  per  pound 

TRIMOUNTAIN  MINING  COMPANY 
Statement  of  Receipts  and  Expenditures  from  Date  of  Organization  to  December,  31, 

1918 
Receipts 

Capital  stock 


From  sale  of  copper  (1902) 
From  sale  of  copper  (1903) 
From  sale  of  copper  (1904) 
From  sale  of  copper  (1905) 
From  sale  of  copper  (1906) 
From  sale  of  copper  (1907) 
From  sale  of  copper  (1908) 
From  sale  of  copper  (1909) 
From  sale  of  copper  (1910) 
From  sale  of  copper  (1911) 
From  sale  of  copper  (1912) 
From  sale  of  copper  (1913) 


5,730,633  Ib. 

9,237,051  Ib. 
10,21 1,230  Ib. 
10,476, 462  Ib. 

9,507, 933  Ib. 

8,190,711  Ib. 

6, 034, 908  Ib. 

5,282,404  Ib. 

5,694,868  Ib. 

6, 120,417  Ib. 

6, 980,713  Ib. 

4, 990, 938  Ib. 


$2,000,000.00 
712,959.76 
1,186,547.57 
1,396,188.30 
1,620,893.76 
1,791,714.68 
1,415,088.48 
807,901.07 
686,331.95 
725,138.66 
767,332.52 
1,127,603.33 
743,226.51 


240  THE  COST  OF  MINING 

From  sale  of  copper  (1914)         5,048,306  Ib 675,293 . 75 

From  sale  of  copper  (1915)         8,302,896  Ib 1,445,041 . 27 

From  sale  of  copper  (1916)         8,720,558  Ib 2,204,557 . 06 

From  sale  of  copper  (1917) .  .     6,278,097  Ib 1,804,006 . 21 

From  sale  of  copper  (1918)         5,343,586  Ib 1,322,894 . 09 


Total  copper  production,         122,151,711  Ib 

Balance  of  interest  account '. 216,556 . 33 


$22,649,275.30 
Last  3  years  20,342,241  5,331,457 


101,809,470  17,317,818 

Receipts  from  copper  sales  to  end  of  1915,  $15,101,000  from  101,809,000  pounds, 
equal  to  14.84  cents  per  pound. 

Expenditures 

Real  estate  (Trimountain  location) $800,000.00 

Real  estate  (land  since  purchased) 3,000. 00 


Net  expenditures  for  construction  and  equipment,          803,000.00 
mining  operations,  smelting  and  marketing  copper, 
taxes,  and  incidentals 16,768,453.88    $17,571,453.88 


Net  balance  of  receipts $5,077,821 . 42 

Dividends  paid  in  1903 $300,000 . 00 

Dividends  paid  in  1908 500,000 . 00 

Dividends  paid  in  1910 150,000 . 00 

Dividends  paid  in  1912 300,000.00 

Dividends  paid  in  1913 200,000 . 00 

Dividends  paid  in  1918 500,000.00      1,950,000.00 


Excess  of  receipts  over  expenditures $3,127,821 .42 

Dividends  to  end  of  1915  from  101,809,000  pounds,  $1,450,000,  equal  to  1.42  cents 
per  pound. 

From  these  statements,  assuming  that  the  period  up  to  the  end  of 
1915  represents  normal  competitive  conditions,  we  may  deduce  that  the 
average  price  of  copper  for  the  Champion  was  15  cents  a  pound  and  the 
profits  for  this  5.11  cents,  leaving  a  cost  of  9.89  cents. 

Similarly  for  the  Trimountain  we  find  that  the  price  of  copper  was 
14.84  cents  the  profits  1.42  cents  and  the  cost  13.42  cents.  The  results  of 
the  succeeding  years,  as  in  most  other  cases,  do  not  correspond  with 
these  figures.  From  1913  to  1918  the  Trimountain  paid  no  dividends, 
from  which  we  may  suppose  that  it  is  normally  unprofitable.  It  took 
three  years  of  war  prices  to  enable  it  to  pay  anything. 

The  Baltic,  also,  is  probably  a  modest  earner.  No  detailed  report  is 
issued  for  it  for  1918,  but  the  cost  of  producing  copper  is  put  down  at 
15.07  cents;  that  of  Trimountain  being  18.42  cents,  and  of  Champion 
11.92  cents.  The  average  of  these  costs,  considering  the  general  con- 
ditions, is  undoubtedly  good.  On  a  return  to  pre-war  prices  the 
Champion  would  be  producing  for  about  7  cents  a  pound. 


LAKE  SUPERIOR  COPPER  MINES  241 

Tamarack  and  Calumet  &  Hecla  (1908).— The  third  type  of  Lake 
Superior  copper  mines  is  represented  by  the  Tamarack  and  the  Calumet 
&  Hecla.  The  record  of  these  properties  shows  very  clearly  that  the 
conglomerate  is  a  more  difficult  and  expensive  problem  than  the  amygda- 
loid. The  deposit  has  the  advantages  of  remarkable  uniformity  and  con- 
tinuity; but  as  compared  with  the  amygdaloid,  the  conglomerate  has 
three  features  that  substantially  increase  the  cost  of  working:  (1)  The 
richness  of  the  ore  has  averaged  2^  times  as  great  as  that  of  the  character- 
istic amygdaloid;  consequently  the  cost  for  smelting  has  been  2%  times 
as  great,  and  this  fact  has  meant  an  increased  cost  of  not  far  from  50 
cents  a  ton.  (2)  The  conglomerate  is  much  harder,  tougher,  and  more 
difficult  to  handle.  It  breaks  in  rough,  ugly  chunks  which  wear  out  the 
tram  cars,  bin  linings,  and  stamp  shoes  very  rapidly.  Its  greater  hard- 
ness is  reflected  by  the  fact  that  the  mills  will  handle  40  per  cent,  more 
amygdaloid  than  of  conglomerate.  This  characteristic  in  itself  is  pro- 
bably sufficient  to  add  in  the  neighborhood  of  20  cents  a  ton  to  the  cost 
of  handling,  breaking,  tramming,  crushing,  and  milling  this  ore.  (3) 
The  hanging  wall  is  loose  and  the  mines  need  constant  and  expensive 
timbering.  This  item  has  added  from  25  to  75  cents  a  ton  to  the  cost. 

The  total  of  these  increased  costs  may  be  reckoned  at,  in  round  numb- 
ers, $1.20  a  ton.  The  above  figures  have  reference  to  the  average  con-, 
glomerate  ore  as  mined  to  date  which  has  contained  not  less  than  55  Ib. 
copper  to  the  ton.  At  present1  the  Calumet  &  Hecla  is  yielding  only  42 
Ib.  a  ton  while  the  Tamarack  is  yielding  only  23  Ib.  On  the  present  basis, 
therefore,  the  smelting  costs  are  somewhat  lower  than  they  would  be  for 
an  average  of  this  class. 

Results  and  Costs  at  the  Tamarack. — Up  to  July  1,  1893,  the  Tama- 
rack mine  had  produced  84,000,000  Ib.  copper  from  1,400,000  tons  of 
rock,  an  average  of  60  Ib.  per  ton.  The  cost  for  operating  was  $5,816,083, 
or  $4.15  a  ton.  Construction  on  the  original  mine  from  which  this  ore 
came  was  69  cents  a  ton  additional.  The  total  cost  had,  therefore,  aver- 
aged $4.80  per  ton  or  8  cents  per  pound  copper.  In  1892-3,  345,925 
tons  were  stamped,  yielding  46.43  Ib.  per  ton.  The  costs  were: 


Underground  mining $1 . 69 

Rock  house,  surface  and  stamping 0 . 77 

Smelting 0.82 


Total  operating $3 . 28 

Construction  on  old  mine 0 . 04 

Construction  on  new  shafts . .  2.14 


Total $5.46 

1  January,  1908.     The  yield  has  since  fallen  below  35  Ibs. 

16 


242  THE  COST  OF  MINING 

By  1899  the  costs  were: 

Total  operating $3 . 50 

Construction 0 . 63 

Total $4.13 

By  1904  the  costs  had  become 

Mining  and  stamping $2 . 42 

Smelting  and  general 0.61 

Total $3.03 

Of  late  years  a  good  deal  of  amygdaloid  has  been  mined. 

Since  1904  the  operations  on  the  Tamarack  have  been  very  much 
interfered  with  by  a  serious  underground  fire  and  other  difficulties  and 
delays.  It  is  probable  that  the  above  figures  give  a  fair  idea  of  the  results 
obtained.  The  item  of  construction  has  been  very  heavy  indeed.  It  is 
accounted  for  by  the  sinking  and  equipping  of  five  very  deep  and  expen- 
sive shafts.  It  appears  that  up  to  1899  the  output  of  the  Tamarack  had 
been  about  4,400,000  tons,  produced  at  a  total  cost  of  $17,600,000  ,or 
$4  a  ton.  The  resulting  product  was  195,000,000  Ib.  copper,  or  an  aver- 
age of  about  44.3  Ib.  to  the  ton,  the  cost  of  fine  copper  being  about  9  cents 
a  pound. 

Calumet  &  Hecla. — The  Calumet  &  Hecla  has  been  a  rich  mine 
and  its  costs  may  have  been  somewhat  higher  than  were  strictly  neces- 
sary. For  the  last  ten  years  it  seems  that  the  costs  have  averaged  a  little 
over  $4  a  ton,  but  since  the  company  issues  no  detailed  reports,  it  is 
possible  to  make  only  an  approximation.  The  cost  does  not  appear  at 
a  disadvantage  compared  with  the  Tamarack,  for  while  the  Tamarack 
ores  averaged  about  44  Ib.  copper  per  ton,  those  of  the  Calumet  & 
Hecla  have  averaged  50  Ib.;  and  while  it  is  true  that  the  Tamarack  has 
expended  large  sums  on  new  construction  and  development,  it  must  not 
be  forgotten  that  the  Calumet  &  Hecla  has  done  the  same  thing  during 
the  same  periods.  At  present  the  Calumet  &  Hecla  is  mining  an  increasing 
proportion  of  amygdaloid  from  the  neighboring  Osceola  and  Kearsarge 
lodes  to  the  eastward  of  the  conglomerate. 

It  appears  that  the  conglomerate  workings  as  compared  with  a  rep- 
resentative amygdaloid  mine  like  the  Wolverine  would  appear  somewhat 
as  follows: 

Underground  factors  making  for  increased  cost  are:  the  very  great 
depth,  averaging  more  than  4000  ft.  vertically;  the  considerable  heat, 
averaging  about  80°;  the  necessity  of  timbering,  which  in  itself  accounts 
for  at  least  30  cents  a  ton;  the  hard,  angular  character  of  the  ore  which 
renders  shoveling,  tramming  and  handling  more  difficult  and  expensive; 
and  finally,  the  difficulty  of  maintaining  the  deep  inclined  shafts  under 
a  weak  hanging  wall. 

It  does  not  seem  unreasonable  to  appraise  these  factors  at  50  cents 
a  ton,  at  least,  excess  cost  over  that  of  the  amygdaloid  mine  of  moderate 
depth.  The  cost  of  milling  the  ore  should  be  approximately  15  cents  a 


LAKE  SUPERIOR  COPPER  MINES 


243 


ton  greater;  while  the  cost  of  smelting  42  Ib.  fine  copper  per  ton  as 
against  22  Ib.  should  be  25  cents  more.  To  sum  up  it  appears  that  mining 
costs  representing  the  two  types  should  compare  about  as  follows: 


Amygdaloid 

Conglomerate 

Underground  expense  and  rock  house 

$1  10 

$1   60 

Transportation  and  milling  

0  40 

0.55 

General  expense                   .            .            .... 

0  22 

0  22 

Smelting  refining  and  marketing 

0  25 

0  50 

Total 

$1  97 

$2  87 

The  above  costs  omit  the  item  of  construction  which  has  always  been 
a  very  large  item  with  these  mines.  It  is  safe  to  say  that  the  Calumet 
&  Hecla  has  spent  40  cents  a  ton  throughout  its  career  on  its  plant  for 
construction. 

The  costs  of  Calumet  &  Hecla  on  Osceola  amygdaloid  for  1910  are 
reported  as  follows: 


Mining 

Hoisting 
Rock  house. 


$0.99931 
.   0.101 
0.1336J 


Transportation 0.0844  ] 

Milling 0.2631 

Other..  0.018    J 


Total 


$1.5694 


Assuming  that  the  output  is  18  Ib.  copper  per  ton,  we  must 

add  for  smelting,  refining,  and  marketing 

Add  also  for  general  expense,  same  as  for  Wolverine 


Total.. 


$1.2039 


0.3655 


$1.5694 


0.22 
0.22 

$2.0094 


Calumet  &  Hecla  Records. — Until  1908  this  great  company  had  been 
extremely  guarded  in  giving  out  information  about  its  operating  results. 
In  order  to  form  an  idea  of  its  costs  it  was  necessary  to  compile  such 
scraps  of  information  as  could  be  gleaned  from  a  series  of  reports  and  make 
such  deductions  as  seemed  warranted.  This  state  of  affairs  now  seems 
partly  to  be  a  thing  of  the  past.  A  legal  controversy  over  the  right  of  the 
Calumet  &  Hecla  to  control  and  manage  the  Osceola  Consolidated  Mining 
Company  resulted  in  the  disclosure  of  most  of  the  essential  facts  regard- 
ing the  former  company's  business  condition.  In  the  report  for  1908 
President  Agassiz  frankly  gives  these  facts  and  it  is  to  be  presumed  that 
more  will  be  forthcoming  in  succeeding  reports.  The  following  summary 
shows  the  facts  that  may  be  had  from  the  reports  in  the  past  eleven  years : 


244 


THE  COST  OF  MINING 


Year 

Tons 
fine 
copper 

Price 
cts. 
per  Ib. 

Dividends 

Spent  in  purchase 
new  property 

Balance  of  quick  assols 

1897-8  

41,960 
43,879 
44,548 
37,933 
42,462 
42,216 
41,612 
43,090 

43,652 
46,297 
43,264 

$4,000,000 
7,000,000 
8,000,000 
6,500,000 
4,000,000 
2,000,000 
4,000,000 
4,500,000 

5,000,000 
7,500;000 

5,ooo,!ooo 



$6,558,456 
4,398,544 
4,260,858 
2,168,130  fire 
3,592,779 
6,557,023 
6,583,038 

7,144,000 
10,629,819 
7,028,942 
4,700,755 

1898-9... 

1899-00  

1900-01  

1901-02  

1902-03  
1903-04  

42,000  acres 
timber  land 
$184,859 
9,223,395 

1904-05... 

1905-06 

1906-07  
1907-08  

470,913     15.2 

Total  cash  earnings  
Add  investments,  partial  only  .  . 

$57,500,000 
1,857,701 

$9,408,254 

1,857,701  decrease 

55,642,299 
9,408,252 

65,050,551 

1888 Milled  814,000  tons  for  50,295,721  Ib.  copper— 61^  Ib.  per  ton. 

1897-8 Cost  $4.05  per  ton  milled. 

1899-00 Pounds  copper  per  ton  59.93,  1,464,697  tons  milled. 

1902 Pounds  copper  per  ton  52.44. 


1904-5.. 
1906.. 


Milled  74,235  tons  Osceola  amygdaloid  22  Ib.  per  ton. 
Milled  in  March  27,018  Osceola  amygdaloid. 


1905-6 Milled  1,900,000  tons  for  87,304,000  Ib.— 45.9  Ibs.  per  ton. 

1906-7 Milled  1,900,000  tons  Calumet  conglomerate. 

350,000  tons  Osceola  amygdaloid  for  6,892,548  Ib. 
2,250,000  altogether  for  92,584,000  Ib.  =  41  Ib.  per  ton. 
1907-8 Milled  1,894,176  tons  conglomerate  averaging  39.68  Ib.  per  ton. 

603,891  tons  Osceola  amygdaloid  yielding    11,145,220 

Ib.  or  18.4  Ib.  per  ton. 

In  the  year  ending  April  30,  1908,  the  " Product"  of  refined  copper 
is  stated  at  78,980,466  Ib.  There  is  some  reason  to  believe  that  this 
means  "Product  sold."  It  is  also  reported  that  the  company  was  con- 
stantly in  the  market,  selling  copper  during  the  declining  prices  of  1907. 
If  this  is  so,  it  must  have  realized  practically  the  quotational  average  for 
the  period,  or  16.6  cents.  On  this  basis  the  receipts  for  the  year  were 
about  $13,000,000.  The  dividends  were  $5,000,000,  leaving  a  balance 
of  $8,100,000. 

There  is  no  mention  made  of  any  considerable  outside  investments 
made  during  the  year  except  the  purchase  of  50,100  shares  in  the  Gratiot 
Mining  Company.  What  the  price  was  is  not  stated.  Some  explorations 
were  also  carried  on  in  various  places.  Under  these  circumstances  an 


LAKE  SUPERIOR  COPPER  MINES  245 

estimate  of  the  cost  of  mining  is  nothing  but  a  guess.  However,  I  will 
venture  the  guess.  In  1907  the  dividends  were  $7,500,000.  In  addition 
$9,223,000  were  expended  in  the  purchase  of  property,  but  in  so  doing 
the  balance  of  assets  was  diminished  $3,600,000,  leaving  a  net  expenditure 
of  about  $5,600,000  from  the  proceeds  of  that  year's  business.  The  total 
profits  then  must  have  been  about  $13,100,000.  The  revenue  from  cop- 
per sales  for  that  year  was  approximately  $20,400,000.  Deducting  the 
profits  we  have  left  the  costs,  about  $7,300,000.  In  that  year  350,000 
tons  of  Osceola  amygdaloid  was  mined  at  an  expense  of  $700,000.  Deduct- 
ing this  we  have  $6,600,000  as  the  cost  of  mining  1,900,000  tons  of  con- 
glomerate, $3.47  a  ton. 

In  the  following  year  a  cut  of  10  per  cent,  was  made  in  wages,  but  not 
until  the  latter  part  of  the  fiscal  year.  The  effect  of  this  probably  was  so 
diminished  costs  by  5  per  cent,  for  the  whole  fiscal  year. 

For  1908,  then,  I  place  the  cost  of  mining  the  conglomerate  at  $3.30 
and  for  the  Osceola  amygdaloid  at  $1.90.  The  total  cost  then  would  be: 

Conglomerate,  1,894.176  tons  at  $3.30 $6,230,000 

Amygdaloid,  603,891  tons  at  $1.80 1,150,000 


Total $7,380,000 

Estimated  cost  of  outside  work  and  investments 720,000 


$8,100,000 

These  figures  should  be  read  in  the  light  of  the  following  remarks  by 
President  Agassiz  in  the  report  for  1908: 

"In  several  of  the  previous  annual  reports  the  attention  of  the  stock- 
holders has  been  called  to  the  unsatisfactory  character  of  the  conglom- 
erate below  the  57th  level  in  the  northern  part  of  the  mine.  In  1900,  the 
year  before  Mr.  McNaughton  became  General  Manager  of  the  Company, 
the  conglomerate  yielded  about  59.93  Ib.  of  copper  to  the  ton.  I  regret 
to  state  that  since  then  this  percentage  has  annually  been  diminishing. 
In  1902  it  has  fallen  to  52.44  Ib.  to  the  ton.  For  the  past  fiscal  year  its 
yield  was  39.68  Ib.  To  maintain  our  product  we  have  stamped  an  addi- 
tional amount  of  conglomerate  rock  in  addition  to  the  amygdaloid  rock 
mined  from  the  Osceola  lode,  which  has  been  increased  from  74,235  tons 
in  1905  to  603,891  tons  in  1907-08.  The  amount  of  conglomerate  stamped 
has  gradually  increased  from  1,464,697  tons  in  1900  to  1,894,176  tons  in 
1907-08.  Thus  in  1907-08  eating  into  the  available  conglomerate  at 
a  rate  far  in  excess  of  that  we  had  been  accustomed  to  consider  the  normal 
additional  source  of  copper  supply  to  replace  that  obtained  from  the 
waning  conglomerate  lode.  We  anticipate  a  still  further  reduction  in  the 
percentage.  During  the  last  five  years  the  cost  per  ton  of  rock  has  been 
greatly  reduced,  partially  offsetting  the  decrease  in  the  copper  contents  of 
the  rock." 


246 


THE  COST  OF  MINING 


It  will  be  seen,  by  a  study  of  the  table  given  above,  that  the  average 
cost  of  copper  for  eleven  years  must  have  been  8.16  cents  a  pound.  In 
1898  it  probably  was  7  cents  for  a  safe  average  and  in  1908  was  about 
9  cents. 

Calumet  and  Hecla  Conglomerate  mine  in  later  years. 

By  comparison  with  these  deductions  the  actual  record  as  given  in 
the  reports  for  recent  years  is  interesting. 

The  report  for  1918  also  shows  the  depths  reached  by  the  different 
shafts.  If  I  understand  it  correctly,  Tamarack  shaft  No.  3  had  reached 
a  vertical  depth  of  about  5800  feet. 

Up  to  the  end  of  1918,  the  Calumet  and  Hecla  had  been  able  to  pay 
in  dividends  from  the  output  of  its  original  mines,  about  $140,000,000. 
from  about  2,700,000,000  pounds  of  copper,  some  5.2  cents  a  pound. 


Conglomerate  Lode 

The  comparative  results  of  operations  for  the  four  years  are  as  follows: 


':-' 

Year  ending  December  31 

1910 

1911 

1912 

1913 

Tons  of  rock  treated  

1,950,040 

$2.13 
58,739,509 
30.12 

8.55c. 
464  feet 
9,215  feet 
625  feet 

1,924,480 

$2.07 
58,469,399 
30.38 

8.25c. 
546  feet 
8,613  feet 
201  feet 

1,746,960 

$2.23 
51,935,245 

28.73 

8.87c. 
523  feet 
10,048  feet 
614  feet 

1,175,259 

$2.99 
32,731,768 

27.85 

12.67c. 
172.5  feet 
5,929  feet 
o  feet 

Mine  cost  per  ton  of  rock  (ex- 
cluding construction)  

Pounds  of  copper  produced 

Pounds  of  copper  per  ton  of  rock  . 
Total  cost  per  pound  of  copper 
produced  .... 

Shaft  sinking  

Drifting  ... 

Crosscuts  and  foot-wall  drifts.  .  . 

The  operating  shafts  on  this  lode  have  attained  the  following  depths : 

Calumet  Nos.  5  and  6 6155.0  feet,  to  boundary  to  60th  level. 

Calumet  No.  4. . 7995.0  feet  to  boundary  to  81st  level. 

Calumet  No.  2 6186.0  feet  sinking  permanently  discontinued 

at  63d  level. 
Slope  shaft. 1588.0  feet  below  57th  level  or  185  feet  under 

66th  level 

Hecla  No.  6 7857 . 5  feet  under  79th  level. 

Hecla  No.  7 7876 . 5  feet  39  feet  under  80th  level. 

South  Hecla  No.  8 6102.0  feet  sinking  permanently  discontinued 

at  63d  level. 
South  Hecla  Nos.  9  and  19. .  .   7823.5  feet  34  feet  under  80th  level 


LAKE  SUPERIOR  COPPER  MINES 


247 


CONGLOMERATE  LODE 
The  comparative  results  of  operations  for  the  past  four  years  are  as  follows: 


Year  ending 

December  31 

1915 

1916 

1917 

1918 

Tons  of  rock  treated  
Mine  cost  per  ton  of  rock  (ex- 
cluding construction)  
Pounds  of  copper  produced  
Pounds  of  copper  per  ton  of  rock  . 
Shaft  sinking 

1,739,984 

$2.13 

51,738,588 
29.74 
201  feet 

1,727,794 

$2.63 
51,785,016 
29.97 
0  feet 

1,751,621 

$3  26 
50,415,860 

28.78 
0  feet 

1,547,603 

$4.09 
43,329,816 
28.00 
33  feet 

Drifting  
Crosscuts  and  foot-wall  drifts  .  .  . 

5,22  feet 
0  feet 

5,  142  feet 
Ofeet 

2,942  feet 
0  feet  feet 

7,  149  feet 
3,659  feet 

The  operating  shafts  on  this  lode  have  attained  the  following  depths: 
Calumet  Nos.  5  and  6. . .   6.155.0  feet,  to  boundary  to  60th  level. 

Calumet  No.  4 7,995.0  feet  to  boundary  to  81st  level. 

Calumet  No.  2 6,186.0  feet  sinking  permanently  discontinued  at  63d  level. 

Slope  shaft 1,588.0  feet  below  57th  level  or  185  feet  under  66th  level. 

Hecla  No.  6 7,874.6  feet,  32.7  feet  under  80th  level. 

Hecla  No.  7 7,977  feet,  40  feet  under  81st  level. 

South  Hecla  No.  8 6,102.0  feet,  sinking  permanently  discontinued  at  6d3  level 

South  Helca  Nos.  9  and  108,132.7  feet,  152  feet  under  83d  level. 

Red  Jacket  Shaft 4,900  feet,  100  feet  under  81st  level. 

Tamarack  No.  3 29.5  feet  below  the  18th  level,  5,253  feet  from  surface. 

Tamarack  No.  3  (inclined)  .       8  feet  below  the  24th  level,  616  feet  below  the  18th 

level. 
Tamarack  No.  5 147  feet  below  the  40th  level,  5,308.5  feet  from  surface. 

about  70  per  cent,  metal.  This  mineral  is  then  smelted  at  plants  situated 
along  the  shores  of  Portage  lake,  an  inlet  of  Lake  Superior.  The  smelting 
and  refining  are  done  by  a  single  process;  and  ingot  copper  is  produced 
that  needs  no  further  refining,  the  copper  being  exceptionally  pure  and 
commanding  a  higher  price  than  any  other  in  the  market. 


CHAPTER  XV 

BISBEE 

GEOLOGIC  SPECULATIONS — THE  PERMIAN  REVOLUTION — GEOGRAPHY  OF  PENNSYL- 

VANIAN  TIME GEOGRAPHY  OF  PERMIAN  TIME THE  PRESERVATION  Ol  MINERAL 

IZED  BATHOLITHS THE  PERMIAN  MOUNTAIN  RANGE  OF  CALIFORNIA ECONOMIC 

CONDITIONS     OF     BlSBEE EARLY     IDEAS     OF     DR.     JAMES     DOUGLAS — PRESENT 

STATE  OF  THE  BUSINESS CALUMET  AND  ARIZONA HlSTORY SMELTERIES  AT 

DOUGLAS — ECONOMIC  UNITS — GROWTH  OF  PHELPS  DODGE  AND  CALUMET  AND 
ARIZONA — COMPARISONS  OF  TEN  YEARS — GENERAL  TENDENCIES — PURSUIT  OF 
ECONOMY — ANALYSIS  OF  MINING  COSTS  OF  THE  COPPER  QUEEN. 

Various  references  have  been  made  in  other  chapters  to  the  cycles  of 
change  that  have  occurred  upon  the  earth's  crust,  (see  chapters  on  coal, 
the  Jerome  district,  the  Porphyry  coppers).  It  has  been  explained  that 
coal  is  deposited  toward  the  end  of  long  periods  of  base-leveling;  that 
many  or  most  of  the  valuable  ore  deposits  are  incident  to  intervening 
mountain  building  efforts;  that  the  principal  fissure  veins  and  dissemin- 
ated sulphide  deposits  have  identical  origin;  that  erosion  is  a  necessary 
factor  in  exposing  them;  and  an  important  factor,  through  the  process 
of  secondary  enrichment,  in  determining  their  economic  value.  It  seems 
worth  while  to  dwell  a  little  further  upon  the  observations  upon  which 
these  conclusions  rest,  and  to  bring  out  if  possible  a  few  more  points  about 
the  relation  of  ore-deposits  to  broad  geologic  processes.  It  is  not  im- 
probable that  very  much  more  may  be  learned  about  the  distribution  of 
valuable  deposits  by  analyzing  the  geography  of  past  epochs  of  world 
history.  For  this  line  of  thought  the  ore  deposits  of  Bisbee  will  serve  as 
an  illustration. 

It  is  a  rational  inference,  or  at  least  an  entertaining  speculation,  that 
these  deposits  originated  during  the  Permian  " revolution."  They  occur 
in  Paleozoic  rocks,  some  of  which  are  as  late  as  Pennsylvanian ;  but 
according  to  the  geologists  of  the  Phelps  Dodge  Corporation,  these  rocks 
are  not  only  unconformable  with  the  next  sedimentary  series  of  the  local- 
ity, the  Comanche  or  Lower  Cretaceous,  but  had  been  partially  un- 
covered and  extensively  oxidized  during  an  intervening  period.  It  is 
true  that  there  is  a  possibility  that  the  mineralization  took  place  in  Trias- 
sic  or  Jurassic  times,  but  on  the  whole  it  seems  more  likely  that  during 
those  periods  this  part  of  the  continent  was  elevated  and  was  undergoing 
the  erosion  just  referred  to;  that  the  mountain  building  and  batholithic 
action  of  which  these  deposits  were  an  incident,  had  occurred  somewhat 
earlier.  Various  facts  may  be  patched  together  to  support  this  conclusion 
as  well  as  to  give  some  inkling  of  the  geography  of  the  times. 

248 


BISBEE  249 

During  the  late  Carboniferous,  or  Pennsylvanian,  time,  an  extensive 
clear  water  sea  covered  a  very  large  part  of  western  North  America  and 
in  it  were  deposited  enormous  beds  of  limestone  which  may  be  found  in 
every  state  west  of  Louisiana  and  Minnesota,  with  the  possible  exception 
of  Washington.  Similar  marine  limestones  are  found  also  to  the  south 
in  Mexico  and  to  the  north  in  western  Canada.  Swampy  lowlands, 
occasionally  flooded  by  shallow  invasions  of  the  sea,  extended  in  a  vast 
plain  from  central  Oklahoma  to  the  Hudson  river,  and  even,  perhaps, 
through  Massachusetts  to  Nova  Scotia  and  beyond.  It  appears  then 
that  the  shore  of  the  Pacific  ran  prevailingly  from  the  present  Gulf  of 
Mexico  northwestwardly  through  the  heart  of  the  Great  Plains  into  north- 
western Canada.  One  would  suppose  that  in  the  vast  area  between  this 
shore  line  and  the  present  Pacific  coast  there  must  have  been  some  islands, 


Section  A-B^  Se^fioa  A-B 


Section  C-D- 
Section  K-F  0     loo    200    300    «00    Mto  F*M 


FIG.  5. — Sketch  showing  arrangement  of  ore  bodies,  in  Bisbee,  Arizona  where  1  foot 
of  development  work  opens  11  tons  of  ore. 

great  or  small,  but  so  far  as  I  can  learn,  the  position  of  any  such  islands 
has  not  yet  been  made  out.  It  thus  seems  to  be  a  fair  statement  that  the 
great  plains  on  which  the  Pennsylvanian  coal  was  formed,  now  far  within 
the  drainage  of  the  Atlantic,  at  that  time  debouched  upon  the  Pacific 
Ocean.  The  main  land  mass  at  that  time  was  undoubtedly  the  north- 
eastern half  of  the  present  continent  to  which  perhaps  there  were  then 
attached  large  areas  toward  Greenland  and  Iceland  and  even  Northern 
Europe,  that  are  now  partially  flooded  by  the  Atlantic.  It  is  also  pro- 
bable that  the  land  itself  was  comparatively  flat,  having  been  maturely 
eroded  into  a  very  moderate  relief. 

These  conditions  in  the  opinion  of  geologists  are  sufficient,  or  nearly 
sufficient,  to  explain  the  climate  of  Pennsylvanian  times,  which  ap- 
parently was  mild,  moist  and  equable  over  most  of  the  world.  Perhaps 


250  THE  COST  OF  MINING 

the  area  of  sea  as  compared  to  land  was  considerably  greater  than  it  is 
today.  This,  it  is  supposed,  might  be  brought  about  by  the  long  con- 
tinued erosion,  by  which  a  considerable  portion  of  the  continents  had 
actually  been  swept  into  the  sea,  and  at  the  same  time  the  sea  level  had 
been  raised  appreciably  simply  by  the  displacement  of  the  water  of  the 
ocean  basins  by  sediments.  Of  course  if  the  solid  crust  of  the  earth 
should  be  reduced  to  a  dead  level,  that  is  if  the  inequalities  were  to  be 
removed,  there  would  be  neither  continents  nor  islands,  but  a  universal 
ocean  about  two  miles  deep.  It  is  thought  that  the  progress  of  base- 
leveling  might  bring  about  some  portion  of  such  a  result. 

However  this  may  be,  it  is  at  least  significant  that  changes  of  climate 
seem  to  coincide  with  changes  of  geography.  Both  occurred  during  the 
Permian.  In  the  Rocky  mountain  area  the  sea  not  only  disappeared 
throughout,  but  the  thick  masses  of  sediments  which  had  formed  on  its 
floor  were  broken  through  by  the  upthrust  of  fault  blocks  and  the  crystal- 
line rocks  (granites,  etc.,)  of  the  underlying  crusts  were  exposed  along 
many  an  excarpment.  To  mention  well  known  localities,  evidences  of 
this  may  be  seen  plainly  at  the  Garden  of  the  Gods,  near  Colorado  Springs 
and  at  numerous  other  localities  easily  visited  along  the  Front  Range  all 
the  way  from  Cheyenne  to  Albuquerque.  If  one  examines  the  red  con- 
glomerates in  the  Garden  of  the  Gods,  he  finds  that  some  of  them  are 
almost  pure  granitic  talus,  which  crumbles  in  the  fingers  and  is  patently 
derived  from  the  Pike's  Peak  granite.  Two  handfuls  of  such  gravel, 
one  from  the  Permian  red  beds,  the  other  from  a  stream  that  washes  it 
down  in  1919,  are  absolutely  indistinguishable. 

Other  evidences  of  an  abrupt  change  of  climate,  are  far  from  lacking. 
In  central  Kansas  great  beds  of  salt  are  found  in  a  wide  area  in  Permian 
rocks,  representing  the  drying  up  of  an  extensive  sea — a  sure  proof  of 
desert  climate.  Such  an  occurence  may  be  explained  by  the  emergence 
of  the  new  mountain  barrier  just  referred  to,  just  as  the  drying  of  Great 
Salt  Lake  of  our  day  is  explained  by  the  presence  of  the  Sierra  Nevada. 
In  other  parts  of  the  world  intense  refrigeration  took  place.  Continental 
glaciers  on  an  immense  scale  were  developed  in  south  central  Asia, 
in  South  America,  South  Africa  and  Australia.  The  Permian  was  a 
''revolution"  indeed. 

It  is  in  such  events  that  many,  if  not  most,  ore-deposits  originate. 
The  upthrust  of  mountain  chains  and  plateaus,  the  deepening  of  oceanic 
troughs  must  be  due  to  the  exhaustion  of  the  ties  that  had  been  maintain- 
ing the  stability  of  the  earth's  crust;  or  conversely,  during  a  long  period 
of  quiesence  strains  accumulate  in  the  sub-crust.  Such  strains  are 
expressed  either  in  heat  or  movement  or  in  both ;  the  longer  they  accumu- 
late, the  more  heat  and  movement  there  will  be  to  dispose  of.  Naturally 
this  is  a  matter  of  speculation,  but  a  review  of  geologic  history  as  well  as 
a  study  of  the  principal  areas  of  mineralization,  tends  to  urge  it  upon  one's 


BISBEE  251 

imagination.  It  seems,  moreover,  worth  noting  that  the  escape  of  molten 
magmas  into  the  upper  crust  is  especially  favorable  to  the  formation  of 
ore  deposits  when  that  surface  has  been  covered  by  a  thick  accumulation 
of  sediments.  It  is  supposed  that  the  chief  mineralizing  agent  is  super- 
heated water  thrown  off  by  the  cooling  and  crystallization  of  extensive 
magmas.  If  such  waters  escape  freely  to  the  surface,  the  mineralization 
also  will  escape  in  the  air.  If,  however,  the  magmas  force  their  way  only 
into  the  lower  portions  of  the  comparatively  cold  crust,  say  into  the 
lower  strata  of  great  sedimentary  formations,  the  waters  from  them  will 
be  cooled  by,  and  their  mineral  contents  precipitated  in  those  rocks. 
Mineralization  takes  place  in  or  around  the  upper  portions  of  the  peri- 
pheral surface  of  the  cooling  magmas,  or  batholiths. 

Several  consequences  would  follow.  The  batholithic  action  is  a  part 
of  the  formation  of  mountains.  Mountains  are  subject  to  intensified 
erosion.  If  the  domes  of  the  batholiths,  even  when  buried  under  over- 
lying masses,  are  raised  far  above  the  base  level  of  erosion  they  will 
eventually  be  attacked  and  swept  away.  The  larger  batholiths  so  far 
as  they  may  be  seen  to-day  are  those  to  which  this  has  happened.  Their 
upper  surfaces  are  no  longer  there.  They  contain  quite  generally  only 
feeble  and  ill-concentrated  mineralizations,  although  such  mineralization 
may  be  widespread. 

A  very  brief  review  of  base-leveled  mountain  systems  containing 
extensive  igneous  intrusions ;  such  as  might  have  produced  ore  deposits, 
confirms  this  observation.  The  old  mountain  ranges  of  New  England 
and  Canada,  as  well  as  more  modern  but  extensively  eroded  batholiths 
like  the  Sierra  Nevada  and  the  Central  Idaho,  carry  only  scattered  and 
generally  worthless  minerals. 

Good  ore  deposits  are  not  wanting  in  ancient  mountain  systems,  but 
they  are  found  in  positions  where  they  have  been  protected  from  excessive 
erosion.  In  another  expression,  they  have  remained  wholly  or  in  part, 
below  the  base  level.  Bisbee  is  an  excellent  case  in  point.  It  has  twice 
been  exposed  by  erosion,  first  in  pre-Cretaceous  times  and  again  in  the 
Quaternary.  But  in  both  cases,  apparently,  the  erosion  barely  reached 
down  to  the  main  deposits,  which  have  been  preserved  far  more  thor- 
oughly than  most  others,  so  that  they  remain  as  good  an  example  of  their 
type  as  can  be  found  anywhere. 

For  all  local  details  one  may  refer  to  many  interesting  publications, 
particularly  Ransome's  "Geology  and  Ore  Deposits  of  the  Bisbee  Quad- 
rangle/' U.  S.  Geological  Survey,  Professional  Paper  No.  21  (1904) 
and  the  "  Geology  of  the  Warren  District/'  by  Bonillas,  Tenney  and 
Feuchere,  Bulletin  No.  117,  September,  1916,  American  Institute  of 
Mining  Engineers.  It  is  from  these  papers  that  I  get  most  of  my  facts. 
One  or  two  observations  designed  to  link  these  facts  with  others  may  be 
suggestive,  or  at  least  worth  some  attention. 


252  THE  COST  OF  MINING 

The  Bisbee  batholith  so  far  as  exposed  (in  Sacramento  Hill)  is  a  tiny 
one.  How  large  it  may  be  at  some  lower  horizon  is  pure  guess  work; 
the  only  certain  thing  is  that  it  expands  going  downward  in  such  a  way  as 
to  suggest  that  the  known  portion  is  only  the  crest  of  a  roughly  conical 
mass,  the  base  of  which  may  be  many  times  the  area  of  the  whole  explored 
district.  This  little  batholith  never  has  been  the  core  of  a  prominent 
mountain  mass,  its  scale  is  merely  that  of  an  outlier.  That  is  why  it 
remains  so  nearly  intact.  It  was  formed  on  the  fringe  or  flank  of  a 
Permian  mountain  chain  in  which  batholithic  action,  with  its  accom- 
panying compression  of  the  upper  crust,  including  the  sedimentary 
strata  lying  upon  it,  occurred  on  a  grand  scale.  But  Bisbee  is  plainly 
not  within  this  chain.  The  rocks  are  not  violently  contorted,  but  only 
gently  inclined.  They  show  only  the  beginnings  of  contact  metamor- 
phism.  Bisbee  lay  in  the  foothills  of  the  Permian  mountains.  Its 
topography,  as  shown  by  the  position  of  the  overlying  Cretaceous  forma- 
tion, was  typical  foothill  topography  i.e. — rocky  hills  and  talus  slopes. 
The  big  mountain  chain  lay  toward  the  west  or  southwest,  the  lowlands 
toward  the  northeast. 

The  mountains  seem  to  have  risen  rapidly  to  a  great  height,  producing 
immediately  the  climatic  change  referred  to.  This  is  indicated  by  the 
rocks  of  the  Plateau  region,  which,  though  elevated  are  otherwise  nearly 
undisturbed  to  the  present  day  and  have  been,  of  course,  at  all  preceding 
times  back  to  pre-Cambrian.  On  this  plateau  the  Moenocopie  formation, 
of  Permian  or  early  Triassic  age  consists  of  red  shales  containing  only 
salt  water,  a  typical  desert  deposit.  It  represents  with  practical  certainty 
either  an  inclosed  basin,  like  the  present  Great  Basin  of  Nevada  and  Utah, 
or  a  longitudinal  valley  made  arid,  like  the  present  northward  extension 
of  the  Gulf  of  California,  by  a  barrier  that  shut  on  the  moisture  from  the 
ocean.  In  later  Triassic  times  this  plain  was  covered  by  a  coniferous 
forest  of  large  trees,  (the  famous  petrified  forests  of  Arizona  are  a  remnant 
of  it)  similar  to  those  growing  on  the  plateau  at  present;  showing  a  con- 
siderable amelioration  of  the  climate.  It  is  probable  that  this  flat  country 
extended  much  nearer  to  Bisbee  at  that  time  than  the  present  margin  of 
the  plateau,  but  the  indications  are  that  it  did  not  reach  to  it,  perhaps  not 
across  much  of  the  present  intervening  mountain  belt,  because  it  seems 
that  the  Bisbee  district  was  elevated  enough  to  be  undergoing  mode- 
rate erosion.  At  any  rate  its  rocks  had  been  tilted  and  had  been  deeply 
scored  before  the  Lower  Cretaceous  times.  It  is  also  not  improbable 
that  the  change  of  climate  in  Triassic  times  was  due  to  the  wearing  down 
of  the  highest  crests  of  the  Permian  mountains. 

Those  mountains  might  be  called  the  Old  Mohave  mountains,  for  the 
base  leveled  core  of  them  may  be  seen  in  Southern  California,  largely 
upon  the  Mohave  Desert.  This  old  range  must  not  be  confused  with 
any  of  the  present  mountains  in  that  region,  which  are  merely  fault 


BISBEE  253 

blocks  of  recent  age.  On  those  blocks  may  be  found  much  older  rock 
masses  all  of  which  show  the  characteristics  of  a  first  class  mountain 
building  effort.  They  are  sharply  compressed  in  folds,  liberally  intruded 
by  granite,  and  so  thoroughly  metamorphosed  into  marble  and  schists 
that  there  is  generally  no  means  of  identifying  them.  One  mass,  how- 
ever, in  the  San  Bernardino  Mountains  is  so  large  that  its  central  portion 
has  escaped  the  pervading  metamorphism  and  in  it  I  have  found  abun- 
dant Paleozoic  fossils,  enough  to  identify  these  great  marble  fragments 
with  the  limestone  formations  of  Arizona.  There  are  enough  similar 
patches  in  the  intervening  region  to  make  it  certain  that  the  whole 
Paleozoic  series  of  southern  Arizona  extended  through  uninterruptedly 
to  the  Pacific  Ocean. 

What  the  limits  of  the  Old  Mojave  mountains  were  I  have  only  the 
dimmest  idea.  Perhaps  in  a  rude  way  they  are  indicated  by  the  Desert 
Zone  described  by  Ransome.  The  chain  was  certainly  not  less  than  100 
miles  wide,  probably  200  miles,  and  certainly  many  hundred  miles  long; 
undoubtedly  a  mass  greater  in  every  respect  than  the  Sierra  Nevada  of 
the  present  day.  Similar  patches  of  crystalline  marble  are  found  here 
and  there  along  the  coast  as  far  north  as  San  Francisco,  and  undoubtedly 
further,  but  in  the  neighborhood  of  Redding,  180  miles  north  of  San 
Francisco,  the  Paleozoic  rocks  have  changed  their  character.  They  no 
longer  show  intense  metamorphism  or  any  evidence  of  belonging  in  the 
core  of  such  a  mountain  range.  If  the  Old  Mohave  range  went  that  far 
north  therefore,  it  was  near  the  coast.  Southeastward  the  range  doubt- 
less extended  a  long  distance,  far  into  Mexico,  but  to  what  point  we 
must  leave  to  future  investigations. 

The  imposing  batholithic  action  along  this  great  Permian  range  was 
accompanied  by  widespread  mineralization,  but  in  the  core  of  the  range 
only  the  roots  of  the  ore  deposits  remain.  The  bulk  of  them  has  been 
removed  by  erosion.  Probably  it  disappeared  largely  even  in  Triassic 
time. 

Although  the  Bisbee  deposits  are  of  Permian  age,  it  is  far  from  safe  to 
assume  that  the  other  copper  deposits  in  the  region  are  of  the  same  age. 
Another  great  geologic  " revolution"  occurred  at  the  end  of  Mesozoic 
time  and  it  is  to  this  one  and  to  the  disturbances  and  upheavals  that 
continued  more  or  less  through  Tertiary  times,  becoming  especially 
pronounced  toward  the  end  of  the  Tertiary,  that  the  continent  owes  its 
present  form.  Again  batholithic  action  occurred  on  a  considerable  scale 
and  ore-deposits  were  formed  in  the  region.  The  Tombstone  mines, 
barely  20  miles  from  Bisbee,  belong  to  these  later  times.  Some  of  the 
great  copper  mineralizations  such  as  A  jo,  Ray,  Cananea  and  Globe,  may 
also  be  later,  but  so  far  as  I  know  their  age  is  not  so  definitely  fixed. 

The  exploitation  of  the  Bisbee  district  will  be  better  understood  by 
retaining  the  few  pages  relating  to  it  in  the  first  edition. 


254  THE  COST  OF  MINING 

Bisbee  District  (in  1909). — Dr.  James  Douglas  describes  the  Copper 
Queen  mine  in  a  paper  in  Vol.  XXIX,  1899,  Transactions  of  the  A.  I.  M.  E. 
The  ore  yielded,  " about  7  per  cent,  copper  after  a  rough  selection  in  the 
stopes  where  about  one-half  the  total  material  broken  is  rejected.  To 
supplement  the  deficiency  in  filling  the  stopes,  barren  ledge  matter  from 
exploratory  drifts  is  used.  Though  the  timbering  of  worked-out  por- 
tions of  the  mine  is  thus  enforced,  so  violent  is  the  movement  of  the 
ground  that  the  timbers  are  dislocated  or  crushed  to  chips.  About  30  ft. 
board  measure  of  timber  (from  Puget  Sound)  is  buried  in  the  mine  to  the 
ton  of  ore  extracted."  This  is  a  terrific  cost  for  timber.  At  an  average 
price  of  $24  per  M.  delivered  at  the  mine,  we  have  on  this  basis  75  cents  a 
ton  for  timber  alone.  From  7  to  10  tons  of  ore  are  extracted  per  foot  of 
opening  work.  A  large  part  of  the  exploratory  openings  have  to  be 
closely  timbered,  and  the  cost  for  this  work  is  high. 

The  reason  for  the  conditions  described  will  appear  very  plainly  from 
a  consideration  of  the  structural  relations  of  the  orebodies.  Dr.  Douglas 
says: 

"With  regard  to  ledge  matter  and  the  oxidized  ore,  my  own  opinion  is  that 
they  are  the  product  of  replacement  and  local  concentration;  that  where  there  is 
ledge  matter  to-day  there  was,  originally,  more  or  less  compact  iron  pyrites 
carrying  a  small  percentage  of  copper;  and  that  during  the  process  of  alteration 
not  only  did  the  ferruginous  solutions  of  alumina  replace  the  pyrites,  but  the  cop- 
per, by  a  process  of  segregation  akin  to  crystallization,  was  concentrated  and 
collected  into  areas  of  limited  size,  thus  constituting  the  comparatively  small 
bodies  of  oxidized  ores  which  are  disseminated  irreguarly  through  the  very  large 
masses  of  ledge  matter.  As  the  outline  of  the  masses  of  ledge  matter  has  never 
been  traced,  it  is  impossible  to  determine  their  actual  size,  but  approximately 
there  has  been  exposed  above  the  400-ft.  level  not  less  than  10,000,000  tons  of 
edge  matter." 

Since  at  the  time  this  was  written  not  much  over  1,000,000  tons  of  ore 
had  been  mined  above  the  400-ft.  level,  it  is  probable  that  Dr.  Douglas 
believes  that  the  ores  now  occupy  approximately  one-tenth  of  their  origi- 
nal volume;  the  remaining  nine-tenths  being  now  " ledge  matter,"  mainly 
ferruginous  clay. 

Nothing  could  be  clearer  than  the  above  description  as  an  explanation 
of  the  cost  factors.  All  the  altered  residual  masses  must  be  explored; 
this  means  that  the  mine  development,  in  addition  to  the  shafts  and  drifts 
necessary  to  reach  the  ore,  must  search  through  10  cu.  ft.  of  difficult 
mining  ground  for  every  cubic  foot  to  be  extracted. 

At  various  places  in  the  mines  large  masses,  like  kernels,  of  original 
pyrites,  still  exist,  surrounded  on  all  sides  by  the  "  ledge  matter."  Al- 
though workable  ore  is  found  along  the  periphery  of  these  masses,  the 
pyrite  itself  is  not  payable.  No  concentrating  ore  has  yet  been  found  in 
the  district.  All  the  ore  raised  from  the  mines  must  be  smelted,  conse- 
quently it  must  be  slelected  as  much  as  possible. 


BI$BEE  255 

To  sum  up — there  are  in  these  mines  three  powerful  factors  that  make 
for  high  costs:  (1)  A  very  large  proportion  of  development  work;  (2) 
soft  ground,  requiring  slow,  cautious  working  and  heavy  timbering;  (3) 
careful  selection  imposed  by  the  necessity  of  smelting  the  whole  product, 
thus  imposing  a  high  subsequent  metallurgical  cost.  This  is  the  most 
imperative  factor  of  all,  for  it  can  be  shown  that  in  this  case  lower  icosts 
at  the  expense  of  having  to  smelt  lower  grade  ores  might  result  in  fr  ght- 
ful  losses  of  profits.  To  mine  4  per  cent,  ore  for  $3  a  ton  against  7  per 
cent,  ore  at  $6  a  ton,  smelting  costs  remaining  the  same,  would  increase 
the  cost  of  copper  about  0.82  cents  a  pound,  or  $16.40  a  ton. 

During  the  ten  years  since  the  above  was  written  the  Copper  Queen 
has  produced  900,000,000  pounds  of  copper  and  the  Calumet  and  Arizona 
600,000,000.  The  total  output  of  the  district  at  the  end  of  1918  was 

CopperQueen 1,660,000,000  pounds 

Calumet  &  Arizona 771,000,000  pounds 

Shattuck-Arizona 109,000,000  pounds 


2,640,000,000  pounds 

If  we  add  the  production  of  the  present  year,  besides  some  shipments 
not  included  in  these  figures,  we  find  a  total  production  of  not  less  than 
2,800,000,000  pounds  of  copper  alone.  Adding  the  equivalent  in  copper 
of  other  metals  we  may  count  on  a  metallic  output  equal  to  1,500,000 
tons  of  copper.  This  comes  from  a  total  area  not  exceeding  2400  acres. 
I  suppose  the  total  output  of  ore  has  been  about  25,000,000  tons.  In 
round  figures  therefore,  the  output  has  been  10,000  tons  of  ore  and  the 
equivalent  of  1,250,000  pounds  copper  for  every  acre  within  the  extreme 
points  explored  in  the  district. 

This  is  not  all.  It  is  probable  that  not  less  than  5,000,000  tons  of 
good  ore  is  fully  opened  up  in  the  limestone  mines,  besides  more  than 
20,000,000  tons  of  disseminated  ore  in  the  porphyry  of  Sacramento  Hill. 
Discovery  of  new  ore  is  proceeding  at  the  usual  rate.  There  is  fair  reason 
to  suppose  that  the  ultimate  production  of  this  tract  will  be  at  least  twice 
the  amounts  mentioned. 

These  statements  make  a  curious  commentary  on  the  progress  of 
exploration,  knowledge,  inference  and  practice  in  this  kind  of  mining. 
The  late  Dr.  Douglas,  for  35  years  the  active  head  of  the  Phelps-Dodge 
mining  interests,  was  for  many  years  extremely  cautious  in  his  expecta- 
tions of  this  district.  For  a  long  time  he  felt  that  the  valuable  ore  was 
confined  to  erratic  concentrations  which  though,  rich  and  profitable 
while  they  lasted,  might  come  to  an  abrupt  end.  It  was  for  a  quarter 
century  the  custom  of  Phelps,  Dodge  and  Co.,  to  retain  as  surplus  in  the 
treasury  an  amount  of  cash  or  securities  equal  to  the  total  sum  invested 
in  their  mines.  This  was  a  drastic  assurance  that  they  would  not  pay 
themselves  profits  that  were  not  really  profits.  By  this  plan  the  business 


256 


THE  COST  OF  MINING 


might  come  to  a  sudden  end,  but  the  stockholders  would  be  assured  of  the 
safety  of  their  entire  investment.  Dividends  paid  after  making  this 
provision  could  surely  be  regarded  as  income  even  if  the  mines  should  be- 
come worthless  holes  and  their  equipment  rusty  junk.  Dr.  Douglas' 
belief  that  the  original  sulphide  mineralization  was  not  pay  ore  has  been 
proved  not  to  be  true.  This  fact  alone  must  have  altered  profoundly 
his  early  conception  of  the  district.  It  is  probable  that  in  thirty  years 
years  the  development  of  the  country,  plus  the  advancement  in  the  art 
of  mining,  has  reduced  the  minimum  grade  of  merchantable  ore  from 
about  5  per  cent,  copper  to  near  1  per  cent. 

PRODUCTION  OF  COPPER  QUEEN  FOR  THREE  YEARS.     LIMESTONE  MINES  ONLY 


Dry  tons 

Gold,  oz. 

Silver,  oz 

Copper,  Ib. 

Lead,  Ib. 

1915 
1916 
1917 

775,000 
878,000 
790,000 

18,974 
24,030 
19,156 

943,000 
1,096,000 
828,000 

86,000,000 
99,500,000 
93,500,000 

9,388,000 
9,421,000 
6,870,000 

2,443,000 

62,160 

2,867,000 

279,000,000 

25,679,000 

From  this  we  see  that  the  present,  or  recent,  average  of  the  ore  is 
about  114  pounds  copper,  10  pounds  lead  1.1  oz.  silver  and  50  cents  gold 
per  ton.  The  value  of  all  these,  expressed  in  copper  alone  is  about  125 
pounds. 


Year 

Number  of 
employees  at 
mine 

Development, 
feet 

Number  of 
employees  at 
reduction  works 

Tons 
smelted 

Copper 
smelted 

1915 
1916 
1917 

1883 
2530 
2264 

68,431 
80,853 
58,518 

965 
1118 
1485 

1063,329 
1,304,523 
1,276,817 

125,144,000 
171,894,000 
191,581,000 

6677 

207,802 

3569 

3,644,669 

488,619,000 

The  output  of  the  mines  per  man  per  year  is  366  tons,  the  tons  per  foot 
of  development  is  nearly  12;  but  the  latter  is  somewhat  above  the  average. 
The  pounds  of  copper,  including  its  equivalent  in  other  metals,  per  man 
per  year,  is  about  45,700  pounds,  and  at  the  smelteries  145,000  pounds; 
for  both  mining  and  smelting  about  34,000  pounds,  or  somewhat  less 
than  100  pounds  per  day. 

Calumet-Arizona. — The  Copper  Queen  mines  begin  at  the  surface 
or  outcrop,  the  Calumet  and  Arizona  has  always  been  a  "deep  level" 
mine.  The  remarks  made  upon  it  in  the  first  edition  are  here  retained 


BISBEE 


257 


Year 

Copper, 

Price 

Value 
copper 

Gold  and 
silver 

Total 
value 

Tons 

1904 

31,638,660 

12.562 

3,974,448 

$195,926 

$4,170,374 

205,807 

1905 

31,772,896 

14.923 

4,741,484 

178,843 

4,920,327 

202,952 

1906 

37,470,284 

17.96 

6,729,612 

238,464 

6,968,076 

215,671 

1907 

30,689,448 

18.103 

5,554,781 

210,846 

5,765,627 

232,460 

1908 

28,048,329 

12.948 

3,631,655 

234,358 

3,866,013 

265,344 

Total 

159,619,517 

24,631,978 

$1,058,437 

$25,590,317 

1,122,234 

Year 

Development, 
feet 

Dividends 

Excess  of  assets 

No.  of  men 
mining 

Estimated  cost 
of  mining 
per  ton 

1904 
1905 

19,955 
21,737 

$1,300,000 
1,700,000 

$1,823,992 

583 
629 

$6.15 
6  68 

1906 

14,818 

2,600,000 

597 

6.00 

1907 

23,016 

3,300,000 

621 

5  70 

1908 

30,680 

800,000 

$3,423,269 

567 

4.60 

100,206 

$9,700,000 

Copper  equivalent 166,500,000  Ib. 


Copper  equivalent  per  ton 

Approximate  earnings 

Approximate  cost 

Cost  per  ton 

Cost  per  Ib.  copper 

Tons  per  ft.,  development  work 


148  Ib. 

$10,900,000 

$14,790,000 

$13.18 

8 . 9  cents 

11 


The  first  report  that  gives  actual  operating  figures  to  any  extent  is 
that  for  the  year  1908.  The  comparison,  with  the  five-year  period  is 
interesting.  The  amount  smelted  was  265,344  tons  containing  the 
equivalent  of  113  Ib.  per  ton,  against  148  for  the  five  years. 


Operating  mines  and  smelters $2,089,158 

Current  construction 195,408 

Salaries  and  general  expense 32,011 

Refining  and  marketing 368.529 

Ore  purchases 22,964 


Per  Ton 

$7.87 
0.74 
0.12 
1.39 
0.08 


Total 

The  cost  per  pound  copper  is  9  cents. 


$2,708,070        $10.20 


There  is  nothing  to  indicate  the  comparative  cost  of  mining  and  of 
smelting  except  the  number  of  men  employed  in  each.  The  total  number 
at  the  mines  averaged  567,  and  at  the  smelter,  484.  It  seems  probable 
ihat  the  total  cost  of  mining  will  equal  $6  a  day  per  man  employed,  this 


17 


258 


THE  COST  OF  MINING 


being  estimated  on  the  theory  that  the  labor  cost  is  60  per  cent,  of  the 
total,  which  would  indicate  a  mining  cost,  including  development  and 
everything,  of  $4.60  a  ton.  This  cost  is  good  for  Bisbee  and  I  believe 
below  the  average  of  this  mine.  Smelting  would  cost,  on  this  basis, 
•13.18  per  ton,  which  seems  very  good. 

Superior  and  Pittsburgh. — This  property  is  a  consolidation  of  several 
others  which  undertook  a  bold  and  expensive  exploration  of  a  tract  of 
1388  acres  lying  in  the  trend  of  the  assumed  extension  of  the  Copper 
Queen  orebodies.  The  venture  has  been  successful  as  far  as  finding  ore 
is  concerned,  but  has  not  yet  become  profitable.  It  is  heavily  capitalized, 
the  stock  issued  being  1,500,000  shares  at  $10  par  value.  That  the  out- 
come is  viewed  with  confidence  by  the  stockholders,  or  by  the  public, 
is  proved  by  the  present  market  value  (April,  1909)  for  the  stock  of 
$13  a  share. 

Operations  have  been  carried  on  since  the  consolidation  at  a  loss  of 
$1,031,284  in  three  years.  The  output  and  results  have  been  as  follows: 


Dry  tons 
smelted 

Feet 
development 

Copper 

siver 

Total  value 

1906 
1907 
1908 

95,779 
111,710 
214,847 

40,019 

23,332 
29,572 

9,044,875 
9,691,905 
21,924,259 

$21,941 
33,401 
121,296 

$1,645,339 

1,787,544 
1,839,000 

422.336 

92,923 

40,660,539 

$176,638 

$6,271,883 

The  equivalent  of  copper  per  ton  is  100  Ib.  The  cost  per  ton  averages 
$17.30,  and  the  cost  per  pound  copper  17.3  cents.  Tons  per  foot  develop- 
ment, 4^. 

A  great  improvement  over  these  averages  is  shown  by  the  report  for 
1908.  The  copper  equivalent  in  the  ore  for  that  year  is  108  Ib.,  nearly 
equal  to  Calumet  &  Arizona  for  the  same  year.  Here  is  the  record : 

Per  Ton 

Tons  smelted  dry 214,847 

Mining  and  smelting $2,490,857  $11 . 60 

Current  construction 30,938  0. 14 

Salaries  and  general 36,648  0. 17 

Refining  and  marketing 264,869  1 . 23 

Interest 84,719  0.40 


$2,908,031         $13.54 


The  cost  per  pound  was  12.54  cents 


LATER  HISTORY  OF  THE  CALUMET  AND  ARIZONA 

On  the  occasion  of  the  visit  of  the  American  Institution  of  Mining 
Engineers  to  Arizona  in  September,  1916,  this  Company  prepared  for 
distribution,  a  pamphlet  describing  its  history  and  properties,  and  I 


BISBEE  259 

can  do  no  better  than  to  quote  this  concise  bit  of  mining  history  almost  in 
full. 

Early  History. — Until  the  fall  of  1900,  the  Copper  Queen  Consolidated 
Mining  Co.  was  the  only  company  of  any  importance  in  the  Warren 
District.  While  hopeful  prospectors  had  located  many  claims  south  of 
Sacramento  Hill,  these  claims  were  generally  looked  upon  as  worthless. 
Even  when  ore  had  been  developed  from  the  Spray  Shaft  of  the  Copper 
Company  to  within  a  short  distance  of  the  " Irish  Mag"  sideline,  the 
old  belief  that  ore  would  end  at  Sacramento  Hill  prevented  the  develop- 
ment of  the  " Irish  Mag"  and  of  claims  further  south. 

In  1898  Capt.  James  Hoatson  of  Calumet,  Michigan,  visited  the 
Warren  District.  After  becoming  familiar  with  the  occurrence  of  ore 
in  the  district,  and  learning  the  general  location  of  ore  bodies  near  the 
Spray  Shaft,  he  became  convinced  that  a  large  orebody  would  be  found 
in  the  Irish  Mag  claim.  He  interested  friends  in  Calumet  in  his  idea, 
with  the  result  that  the  Lake  Superior  and  Western  Development  Co. 
with  Charles  Briggs  as  President  was  formed  to  develop  the  Irish  Mag 
and  other  claims.  In  March,  1901,  the  company  was  reorganized  as 
the  Calumet  and  Arizona  Mining  Co. 

The  Irish  Mag  Shaft  was  started  in  November,  1900,  and  was  sunk 
to  the  750-ft.  level  before  any  drifting  was  done.  Mr.  I.  L.  Merrill 
was  the  first  Superintendent.  The  first  work  was  disappointing,  and  it 
became  necessary  to  raise  more  money  before  continuing  the  development. 
At  this  time  Mr.  Thomas  F.  Cole,  of  Duluth,  Minnesota,  became 
interested  in  the  prospect.  He  secured  money  with  which  to  continue 
the  work  from  Mr.  Henry  W.  Oliver  and  others  of  Pittsburgh  and 
Duluth. 

A  little  ore  was  found  on  the  850  and  950-ft.  levels,  and  a  small 
smelter  was  started  in  Douglas.  In  the  spring  of  1902  the  Northeast 
Drift  on  the  1050  level  cut  the  main  Irish  Mag  orebody.  For  325 
feet  the  ore  developed  by  this  drift  averaged  over  9  per  cent,  copper. 
From  this  time  the  success  of  the  Company  was  assured.  Shipments  to 
the  Douglas  smelter  were  commenced  in  November,  1902,  and. the  first 
dividend  of  $400,000  was  paid  in  December,  1903.  Early  in  1903  the 
Oliver  Shaft  was  started  to  develop  the  Senator  group  of  claims  and 
the  following  year  large  orebodies  were  found  on  the  1050  level  of  this 
mine. 

Development  Companies. — In  1902  and  1903  the  success  of  the 
Calumet  and  Arizona  Mining  Co.  led  several  of  the  men  who  had  been 
responsible  for  this  success  to  explore  other  ground  lying  still  further 
south  and  east  of  the  productive  area.  The  "Junction  Development 
Co."  "  Pittsburgh  and  Duluth  Development  Co."  "Lake  Superior  and 
Pittsburgh  Development  Co."  and  "Calumet  and  Pittsburg  Develop- 
ment Co."  were  formed  to  develop  various  groups  of  claims.  The  officers 


260  THE  COST  OF  MINING 

and  management  to  these  companies  were  the  same  as  of  the  Calumet  and 
Arizona  Mining  Co. 

Exploration  was  carried  on  under  the  most  discouraging  conditions. 
Shafts  had  to  be  sunk  1000  feet  or  more  before  there  was  any  likelihood 
of  finding  ore.  Usually  the  surface  gave  no  idea  of  where  orebodies  might 
lie,  and  thousands  of  -feet  of  development  work  in  barren  ground  had  to 
be  done  before  orebearing  horizons  were  located.  In  the  Junction  Shaft 
and  the  Briggs  Shaft  great  flows  of  water  were  encountered,  which  at 
times  stopped  all  progress  for  many  months,  until  the  ground  could  be 
drained.  Although  the  volume  of  water  pumped  from  the  Junction 
has  exceeded  4000  gallons  per  minute  and  the  Briggs  has  pumped  over 
2500  gallons  per  minute,  during  13  years  of  fighting  these  heavy  flows  of 
water,  the  pumps  have  never  been  lost. 

Many  million  dollars  were  spent  before  any  of  the  shafts  became  self- 
supporting.  Although  in  one  case  eight  years  elapsed  before  commercial 
ore  was  found,  great  mines  were  finally  developed  on  all  four  properties. 

In  1906  th3  four  smiller  companies  were  combined  to  form  the  Supe- 
rior and  Pittsburg  Copper  Co.,  which  was  absorbed  by  the  Calumet  and 
Arizona  Mining  Co.  in  1910.  In  1913  the  American  Saginaw  Develop- 
ment Co.  was  also  absorbed  by  the  Calumet  and  Arizona  Mining  Co. 

Later  History. — In  1910  and  1911  the  development  of  wonderful 
sulphide  orebodies  in  the  Junction  and  Briggs  Mines  made  these  mines 
the  greatest  in  the  enlarged  Calumet  and  Arizona  property.  The  in- 
creasing proportion  of  sulphide  to  oxide  ore  caused  by  these  large  ore- 
bodies  in  the  lower  mines  was  the  principal  reason  for  building  the  new 
and  larger  smelter  in  1912  and  1913. 

In  1913  the  Irish  Mag  Mine,  the  beginning  and  cause  of  the  success  of 
the  Calumet  and  Arizona  Mining  Co.,  was  practically  worked  out  and 
closed  down.  The  bottom  of  the  limestone  was  reached  on  the  1350-ft. 
level  of  this  mine.  The  Oliver,  Cole,  Hoatson,  Briggs  and  Junction 
Mines  are  all  producing. 

The  present  monthly  shipments  to  the  Douglas  smelter  average  about 
68,000  dry  tons  of  ore,  from  which  5,800,000  Ibs.  of  copper  are  recovered. 
In  addition  about  300  tons  per  day  of  low  grade  pyritic  fluxing  ore  is 
shipped  to  other  smelters. 

To  prevent  depletion  of  ore  reserves  by  this  large  production,  it  is 
necessary  to  do  an  enormous  amount  of  underground  prospecting.  The 
extreme  irregularity  in  distribution  and  shape  of  orebodies  makes  the 
footage  of  drifting  and  raising  necessary  to  develop  a  ton  of  ore  far  greater 
in  Bisbee  than  in  any  other  large  copper  district.  At  present  the  drifting 
and  raising  per  month  carried  on  by  the  Calumet  and  Arizona  company 
alone  averages  over  9000  feet.  In  the  most  productive  part  of  the  district, 
in  order  to  find  all  the  ore  it  is  necessary  to  do  over  a  mile  of  development 
work  per  acre.  This  work  finds  from  60,000  to  80,000  tons  of  ore  per 


BISBEE  261 

acre.  The  great  amount  of  drifting  and  raising  per  ton  of  ore  makes  it 
impossible  to  develop  in  advance  the  ten  or  twenty  years'  life  which  is 
considered  necessary  in  the  case  of  the  great  low-grade  copper  mines. 
Yet  the  fact  that  the  ore  reserves  show  a  constant,  though  small  increase 
makes  it  certain  that  the  life  of  the  property  will  be  long. 

The  Calumet  and  Arizona  Mining  Co.  now  owns  about  2005  acres  of 
mining  claims  in  the  Warren  District.  Nearly  three  quarters  of  this  area 
is  absolutely  undeveloped,  and  only  the  fifteen  acres  of  the  Irish  Mag 
claim  are  considered  to  be  worked  out. 

Summary  of  Production. — In  less  than  14  years,  from  the  time  ship- 
ments started  from  the  Irish  Mag  Shaft  to  July  1,  1916,  the  present  Calu- 
ment  and  Arizona  mines  produced  5,763,226  dry  tons  of  ore,  from  which 
634,694,594  pounds  of  copper  were  recovered.  The  gold  and  silver 
values  in  this  period  amounted  to  $6,913,072.  The  dividends  paid  before 
July  1,  1916,  reached  a  total  of  $25,726,661.75. 

The  last  paragraph  is  particularly  enlightening.  It  may  be  noted 
that  the  dividends  were  up  to  this  time  almost  exactly  4  cents  per  pound 
of  copper.  It  will  be  noted  also  that  the  gold  and  silver  recovered  were 
worth  about  1.1  cents  per  pound.  At  the  summer  of  1916  copper  had 
averaged  nearly  16  cents  a  pound  during  the  life  of  this  mine;  adding  the 
gold  and  silver  it  must  have  been  about  17  cents.  The  operating  costs, 
plant  charges,  investments  and  working  capital  must  have  absorbed  about 
13  cents  a  pound. 

It  will  be  noted  that  the  ore  from  this  mine  is  not  as  high-grade  as 
that  of  its  neighbor.  In  1916  it  produced  85  pounds  copper  per  ton  of 
smelting  ore;  in  1918  about  86  pounds.  In  the  latter  year  the  average 
number  of  employees  was  1636  at  the  mine  alone.  Their  production  was 
50,909,000  pounds,  31,000  pounds  per  man  per  year. 

The  Calumet  and  Arizona  smeltery  at  Douglas  is  said  to  be  one  of  the 
best  in  Arizona,  particularly  in  the  way  of  labor  saving  devices.  In 
1918  the  yield  in  copper  per  man  for  the  year  was  about  120,000  pounds; 
in  tons  about  1200.  In  mining  and  smelting  combined  the  output  per 
man  per  year  was  some  26,000  to  27,000  pounds.  In  1918  the  efficiency 
was  low  and  the  costs  high;  but  in  the  main  the  lower  output  per  man  as 
compared  with  the  Copper  Queen  is  explained  by  the  lower  grade  of  the 
ore,  the  greater  depth  and  wetness  of  the  mines  and  the  larger  proportion 
of  development  work,  both  per  ton  and  per  pound — in  other  words  the 
mines  are  not  so  good. 

Neither  company  publishes  any  cost  details,  although  both  give 
financial  statements  and  many  facts  of  interest.  One  may  state  sweep- 
ingly  that  during  the  past  ten  years  no  new  element  of  importance  has 
been  introduced  to  alter  the  operating  practices  or  costs.  The  latter 
change  from  time  to  time  according  to  the  proportion  of  development 
work,  the  state  of  the  labor  supply,  the  price  of  wages  and  materials, 


262  THE  COST  OF  MINING 

and,  more  particularly,  to  the  grade  of  the  ore.  We  have  seen  that  the 
yield  of  metal  in  mining  and  smelting  per  man  per  year  has  lately  been, 
for  the  Copper  Queen  some  45,000  pounds,  for  the  Calumet  and  Arizona 
about  31,000  pounds.  In  1915  these  outputs  would  have  meant  a  cost 
for  copper  of  about  5  and  7  cents  respectively;  in  1919  they  meant  about 
9  and  12  cents  respectively.  These  costs  are  not  complete.  To  them 
must  be  added  freight  on  ore  from  mines  to  smelteries,  freight  on  copper 
to  New  York,  refining,  general  administrative  and  selling  expenses,  taxes 
and  depreciation.  The  lowest  cost  per  ton  for  mining  ever  attained  by 
the  Copper  Queen  was,  I  believe  about  $5.00,  by  the  Calumet  and  Arizona 
about  $4.50,  in  both  cases  in  the  period  between  1912  and  1915.  At 
present  it  must  be  60  to  80  per  cent,  higher. 

I  have  recited  at  various  places  in  these  pages  about  all  the  facts  in 
regard  to  the  costs  of  operating  these  mines  that  seem  to  have  any  general 
interest;  but  some  facts  on  power,  smelting,  etc.,  may  be  added  for 
reference. 

Most  of  the  power,  at  least  in  the  southern  part  of  the  State,  is  made 
from  the  fuel  oil.  At  the  best  plants  a  barrel  of  California  oil  18°  Beaume, 
weighing  328  pounds,  makes  from  300  to  315  kilowatt  hours  of  power. 
In  such  a  plant,  for  instance  that  of  Ajo,  the  power  is  made  in  Curtis 
steam  turbines,  driving  generators  of  7500  K.W.H.  The  steam  pressure 
used  is  about  250  pounds  with  100  to  110  degrees  superheat.  I  suppose 
such  a  plant  is  about  as  efficient  as  can  be  had  at  a  mining  plant. 

It  will  be  noticed  that  each  pound  of  oil  makes  from  0.9  to  0.95  K.W.H. 
Before  the  war  a  pound  of  such  fuel  in  some  places  would  cost  only  a 
little  over  a  half  cent  (oil  at  $1.70  a  barrel).  The  fuel  cost  per  K.W.H. 
was  therefore  under  six  mills  per  K.W.H.  and  the  total  cost  was  said  to  be 
as  low  as  8  mills.  Of  course  the  power-cost  items  belong  to  the  pre-war 
period  and  at  present  are  at  least  60  or  70  per  cent,  higher. 

From  these  figures  the  cost  rises  at  various  places  very  considerably. 
At  the  Copper  Queen  Plant  at  Bisbee,  at  the  end  of  1916  the  fuel  required 
was  about  3  Ibs.  of  oil  per  K.W.H.  and  at  various  other  places  more 
than  that.  Such  a  consumption  of  fuel  would  indicate  a  cost  of  more  than 
2  cents  per  K.W.H. 

The  progress  of  the  industry  has  called  attention  to  the  possibility 
of  reducing  these  costs  by  means  of  electrical  transmission.  Some  water 
power  is  made  by  the  Government  at  Roosevelt  Dam  and  delivered 
at  the  Inspiration  mine  at  Globe.  I  suppose  that  under  present  con- 
ditions this  power  must  be  the  cheapest  used  in  the  state.  A  considerable 
amount  might  be  obtained  from  the  Colorado  River,  but  the  transmis- 
sion lines  of  some  of  the  mines  would  be  very  long  and  such  a  project 
depends  on  Government  co-operation,  which  means  usually  prolonged  and 
dilatory  negotations.  But  there  is  a  standing  argument  in  favor  of 
manufacturing  the  electrical  power  at  the  coal  mines,  or  rather  in  a  coal 


BISBEE  263 

field,  in  the  northeastern  part  of  the  state  in  the  Plateau  region,  from 
which  transmission  lines  might  reach  practically  all  of  the  mines  at 
distances  from  100  to  200  miles.  The  price  of  oil  seems  likely  to  grow 
higher  as  time  goes  on  and  coal  used  at  the  various  districts  has  to  be 
transported  by  rail  distances  of  several  hundred  miles.  The  cost  of 
such  transportation  is  usually  several  times  the  cost  of  mining  the  coal 
on  the  ground.  I  suppose  that  under  ordinary  conditions  a  large  power 
plant  placed  immediately  at  a  coal  mine  would  produce  power  for  3  to 
4  mills  per  K.W.H.,  say  about  $35  per  horse  power  per  year.  What  the 
transmission  lines  would  cost  I  do  not  know,  but  it  seems  as  if  the  large 
amount  of  power  used  by  the  mines,  plus  a  considerable  amount  used 
in  agriculture  and  other  industries  in  the  state  makes  some  such  develop- 
ment more  or  less  inevitable. 

SMELTING  AT  DOUGLAS 

At  the  end  of  1916  the  Copper  Queen  smeltery,  with  a  capacity  of 
100,000  tons  a  month,  cost  about  $4,000,000.  The  Calumet  and  Arizona 
smeltery  at  the  same  place  with  the  addition  of  a  sulphuric  acid  plant, 
cost  nearly  the  same  amount.  The  average  copper  content  of  the 
ore  at  the  Copper  Queen  was  7J£  per  cent,  and  that  at  the  Calumet  and 
Arizona  about  4J£  per  cent.  In  the  former  case  the  high  grade  was 
explained  by  the  fact  that  a  considerable  quantity  of  high-grade  concen- 
trates and  also  a  good  deal  of  high-grade  crude  ore  was  brought  from 
other  mines.  The  converter  matte  in  this  smelter  ran  about  38  per  cent. 
The  coke  used  in  the  blast  furnaces  was  about  12^  per  cent,  of  the  charge. 
The  per  cent,  of  ore  in  the  charge  was  about  75  per  cent.  The  tons  smelted 
per  square  foot  of  hearth  per  day  was  about  5.8  per  cent.;  about  3  per 
cent,  limestone  was  used  for  flux;  295  cubic  feet  of  air  at  an  average 
pressure  of  28  ounces  was  used  per  square  foot  of  hearth  area.  The 
copper  in  the  slag  was  0.38  per  cent.  In  the  reverberatory  in  which  the 
fine  ore  is  treated  the  matte  fall  was  26  per  cent.;  the  copper  in  the  matte 
34  per  cent.;  the  copper  in  the  slag  0.35  per  cent.;  0.8  per  cent,  barrel  of 
oil  was  used  per  ton  of  charge  and  4%  pounds  of  steam  per  pound  of  oil, 
obtained  from  the  waste  heat.  Of  recent  years,  experiments  in  these 
reverberatories  in  the  way  of  increasing  the  burning  capacity  by  en- 
larging the  drafts  for  escaping  gases  has  increased  the  capacity  from 
400  tons  to  800  tons  per  day.  These  reverberatories  at  the  Copper  Queen 
mines  have  an  area,  I  believe,  of  19  feet  by  91  feet.  Those  at  the  Calumet 
and  Arizona  are  somewhat  larger. 

At  the  Copper  Queen  plant  the  amount  of  ore  treated  per  man  per 
day  was  about  3  tons.  At  the  Calumet  and  Arizona  where  labor  saving 
devices  were  more  extensively  used,  but  where  on  the  other  hand,  the 
amount  of  sampling  required  for  custom  ore  was  very  much  less,  the 
tons  stated  per  man  was  about 


264  THE  COST  OF  MINING 

These  are  the  main  elements  as  far  as  I  know  in  the  cost  of  operating, 
and  in  detail  that  cost  will  be  determined  by  the  price  of  labor  in  the 
various  mines. 

GROWTH  OF  PHELPS-DODGE  AND  CALUMET  AND  ARIZONA  COMPANIES 

One  who  studies  the  economics  of  mining  should  not  fail  to  take  note 
of  the  progress  of  financial  and  industrial  organization  as  shown  by  the 
chief  corporations.  It  must  strike  anybody  that  the  problem  of  re- 
ducing costs  is  confined  principally  to  three  elements:  (1)  to  secure 
cheaper  power,  (2)  to  substitute  power  for  labor,  and  (3)  to  prevent 
useless  duplication  of  effort.  To  accomplish  these  purposes  is  the  chief 
function  of  capital.  To  illustrate  this  process  it  seems  worth  while  to 
retain  in  somewhat  condensed  form  the  following  pages  from  the  first 
edition  which  were  taken  largely  from  the  prospectus  of  Phelps-Dodge 
and  Company,  issued  in  1909. 

STATEMENT  BY  COMPTROLLER 
COPPER  QUEEN  CONSOLIDATED  MINING  COMPANY 

"This  property  consists  of  one  hundred  and  thirty-five  (135)  mining  claims  in 
the  Warren  mining  district,  Cochise  County,  near  the  town  of  Bisbee,  Arizona, 
a  large  smelting  plant  at  Douglas,  of  a  capacity  of  3000  tons  a  day,  which  treats 
the  product  of  the  mines  of  the  Copper  Queen  Company,  and  for  the  time  being 
the  ores  of  the  Moctezuma  Copper  Company,  and  does  general  custom  work. 

The  company  conducts  a  mercantile  business,  and  has  large  stores  and  ware- 
houses in  Bisbee  and  Douglas,  and  a  branch  store  in  Naco,  Arizona,  as  well 
as  other  pieces  of  real  estate.  It  also  owns  mining  interests  in  othe"r  localities. 

"For  five  years  past  the  production  of  the  mines  has  been  294,595,687  pounds. 

"The  output  of  the  Douglas  Reduction  Works,  including  purchased  and  cus- 
tom ores,  for  five  years  past  has  been  363,121,911  Ibs. 

"The  earnings  of  the  company  during  the  five  years  have  been  $22,868,778.24. 

"The  difference  between  earnings  and  dividends  is  represented  by  expendi- 
ture on  increased  plant  facilities,  and  undistributed  assets,  consisting  of  the 
larger  stock  of  coke  and  fuel  necessitated  by  increased  operations;  and  the  accu- 
mulated stock  of  ores  at  the  works,  amounting  in  value  to  over  $1,000,000, 
as  well  as  by  increased  cash  and  increased  reserves. 

"A  large  portion  of  the  company's  mining  property  has  as  yet  been  undevel- 
oped, though  situated  within  the  recognized  mineral  zone  of  the  district,  and 
owing  to  the  difficulty  of  holding  up  the  soft,  shifting  ground  in  which  the  ore 
occurs,  it  has  always  been  found  impossible  to  block  out  ore  reserves  as  large  as 
mines  of  such  capacity  elsewhere  have  usually  maintained,  as  nominally  in  sight. 
There  is,  however,  at  the  present  time  as  much  ore  in  sight  as  at  any  other  period 
of  the  mine's  history. 

"The  valuation  of  the  company's  property  as  of  November  1,  1908,  exclusive 
of  the  mines,  is  as  follows: 

Invested  in  plant $4,974,866.77 

Other  assets 10,915,492.97 

Liabilities..  1,275,573.40 


BISBEE  265 

MOCTEZUMA  COPPER  COMPANY 

"This  property  consists  of  about  2500  acres  of  mineral  ground  in  the  State 
of  Sonora,  Mexico,  on  which  has  been  opened  the  Pilares  mine.  This  is  on  a 
mineralized  body,  oval  in  shape,  and  which  retains  approximately  its  dimensions 
between  surface  and  the  seven  hundred  foot  level.  It  is  about  1700  ft.  in  diam- 
eter from  north  to  south,  and  1200  ft.  in  diameter  from  east  to  west,  and  contains 
a  large  area  of  profitable  ore.  A  narrow  gage  steam  railroad  five  miles  in  length 
connects  the  mine  through  the  Pilares  Tunnel  with  the  concentrating  mill  at 
the  town  of  Nacozari.  The  tunnel  itself,  with  its  branches,  is  over  a  mile  in 
length,  and  is  large  enough  to  allow  of  the  railroad  cars  reaching  through  it  the 
different  sections  of  the  mines,  and  receiving  their  charge  from  large  bins  excavat- 
ed out  of  the  ore.  These  bins  are  of  a  capacity  of  several  thousand  tons  each, 
and  are  fed  through  chutes  extending  to  the  surface  levels,  the  chutes  also 
being  excavated  from  the  mineralized  ground. 

"The  quantity  of  what  may  be  considered  ore  depends  entirely  upon  the 
grade  which  it  is  profitable  at  a  given  price  for  copper  to  work,  but  the  mine  is  at 
present  opened  up  for  an  extraction  of  1500  to  2000  tons  a  day  of  ore  of  an  average 
grade  of  three  per  cent.  The  daily  capacity  of  the  concentrating  mill  just  com- 
pleted at  Nacozari  is  2000  tons.  At  Nacozari  is  a  well-designed  power  plant, 
equipped  with  Curtis  turbines  of  over  4000  horse-power,  for  transmitting  high 
voltage  current  to  both  the  mill  and  the  mine.  For  the  time  being  it  is  found  to 
be  more  profitable  to  convey  the  concentrates  and  rich  ores  by  the  Nacozari 
Railroad  to  Douglas,  Arizona,  seventy  miles  distant,  than  to  smelt  them  on  the 
spot,  the  ores  being  treated  at  Douglas  at  the  same  profit  to  the  Copper  Queen 
Company  as  though  they  were  custom  ores  supplied  by  an  unallied  customer. 
This  feature  of  the  company's  operations  explains  the  comparatively  small  quan- 
tity of  supplies  carried  by  the  Moctezuma  Copper  Company  as  compared  with 
the  other  companies. 

"The  old  concentrating  mill,  which  is  still  intact,  with  its  very  efficient  gas 
engine  and  gas-generating  plant,  which  up  to  within  a  few  months  treated  600 
tons  of  ore  a  day,  is  now  out  of  commission,  though  it  can  be  started  at  short 
notice  as  a  supplemental  plant  to  the  new  mill,  should  this  course  be  desirable. 

"The  production  for  the  five  years  past  has  been  53,858,751  pounds. 

"The  increased  capacity  of  both  the  mine  and  the  concentrating  mill,  owing 
to  recent  improvements,  is  indicated  by  the  fact  that  in  May,  1908,  the  produc- 
tion was  784,892  Ib.  of  metallic  copper,  whereas  by  the  month  of  October  it 
had  reached  2,300,000  Ib.  of  copper,  contained  in  9500  tons  of  12>£  per  cent,  con- 
centrates. A  production  of  approximately  two  million  pounds  of  copper  a  month 
can  now  be  maintained;  and,  if  the  market  demanded  it,  this  production  could  be 
increased  to  three  million  pounds  per  month. 

"The  net  earnings  for  the  five  years  while  the  mine  was  still  in  a  stage  of 
development  and  the  works  were  contracted,  were  $3,617,295. 

"The  company  has  built  and  owns  the  whole  town  of  Nacozari,  and  has  pro- 
vided it  with  a  well-furnished  library  and  amusement  hall,  a  thoroughly  equipped 
hospital,  hotel,  boarding  houses,  and  schools.  At  the  Pilares  mine  the  company 
has  provided  its  workmen  with  comfortable  houses  and  supports  a  school.  At 
both  Nacozari  and  Pilares  the  company  has  large  stores  and  warehouses,  and 
conducts  a  profitable  mercantile  business. 


266 


THE  COST  OF  MINING 


Invested  in  plant $3,046,384. 32 

Other  assets 944,663. 08 

Liabilities 347,221 .22 

THE  DETROIT  COPPER  MINING  COMPANY  OF  ARIZONA 

"The  mines  of  this  company  are  situated  in  the  Clifton  district,  Arizona,  in 
the  same  beds  of  felspathic  rock  which  at  the  present  time  are  yielding  the  prod- 
uct of  the  Arizona  Copper  Company,  the  Shannon  Copper  Company,  and  certain 
less  prominent  organizations.  The  property  owned  by  the  company  consists  of 
one  hundred  and  forty-five  (145)  mining  claims,  and  the  ore  now  extracted 
amounts  to  about  36,000  tons  per  month,  yielding  about  three  per  cent,  of 
copper.  The  bulk  of  the  ore  is  concentrated  mechanically  to  a  grade  of  about 
fifteen  per  cent.,  and  smelted  at  Morenci  in  the  company's  own  smelting  works. 

"The  company's  production  for  the  five  years  has  been  86,247,889  pounds. 

"The  production  for  the  eleven  months  of  the  present  year  has  increased 
to  21,500,000,  owing  in  great  measure  to  improved  facilities  for  treatment.  The 
future  production  with  the  present  equipment  can  be  maintained  at  approximately 
two  million  pounds  of  copper  per  month. 

"The  earnings  during  the  past  five  years  have  been  $3,467,810.81. 

"The  company  runs  a  large  store  and  hotel,  and  owns  considerable  other 
property  in  the  town  of  Morenci,  besides  a  powerful  pumping  plant  on  the  San 
Francisco  River  seven  miles  distant. 

"The  valuation  of  the  company's  property  as  of  November  1,1908,  exclusive 
of  the  mines,  is  as  follows: 


Other  assets . 
Other  assets . 
Liabilities . . 


$2,150,101.00 
2,934,465.97 

149,878.48 


"The  ores  from  the  Copper  Queen  mines  carry  about  twice  the  quantity  of 
copper  contained  in  those  of  the  Nacozari  and  Morenci  districts,  but  this  ad- 
vantage is  offset  by  the  higher  cost  of  mining  the  Queen  ore,  owing  to  the  char- 
acter of  the  deposits  in  which  they  occur.  Moreover,  as  the  Queen  ores  cannot 
be  subjected  to  preliminary  mechanical  concentration,  which  raises  the  smelting 
grade  of  the  Nacozari  and  Morenci  ores,  they  must  be  subjected  to  furnace  treat- 
ment as  they  come  from  the  mines;  hence  the  cost  for  smelting  a  ton  of  Queen 
ore  is  higher  than  the  cost  calculated  on  a  tonof  crude  Nacozari  or  Morenci  ore." 


Year 

Output, 
pounds 

Operating 
profits,  dollars 

Profits  per 
pound,  cents 

Average 
price,  cents 

Cost, 
cents 

1903 

37,257,470 

2,201,640 

5.9                    12.6                   6.7 

1904 

50,151,552 

2,960,659 

5.9 

12.562 

6.962 

1905 

64.625,955 

5,609,486 

8.7 

14.923 

6.223 

1906 

79.219,655 

7,625,854 

9.63 

17.96 

8.33 

1907 

63,341,055 

4,471,137 

7.0 

18.103 

11.103 

Five  years 

294,595,687 

22,868,778 

7.76 

15.7 

8 

BISBEE  267 

The  amount  invested  in  plant  is  given  at  $4,974,800.  Since  it  is 
stated  above  with  reference  to  the  Bisbee  district,  by  Dr.  Douglas  that 
the  ores  of  the  Copper  Queen  average  about  140  Ib.  copper  per  ton,  an 
approximation  that  is  borne  out  by  the  record  of  the  neighboring  Calu- 
met &  Arizona  mine,  it  does  not  seem  rash  to  say  that  the  mining  plant  is 
equal  to  a  capacity  of  000,000  tons  a  year,  and  the  smelting  plant  to 
900,000  tons  a  year.  Averaging  the  two  we  might  say  the  plant  is  such 
that  an  output  of  at  least  750,000  tons  a  year  can  be  taken  care  of.  The 
cost  of  mining  and  smelting  plants  may,  therefore,  be  approximated  at 
$7  per  ton  of  annual  capacity.  Taking  into  consideration  the  character 
of  the  orebodies  exhibited  by  the  remarks  in  the  prospectus,  it  seems  fair 
to  calculate  the  amortization  of  plant  in  a  period  not  exceeding  fifteen 
years  from  the  beginning  of  the  term  in  question.  This  requires  an  an- 
nual instalment  of  10  per  cent.  To  this  should  be  added  depreciation  at 
0  per  cent,  to  cover  the  current  construction.  Applying  these  figures,  not 
the  whole  period,  but  to  the  maximum  capacity  reached  at  the  end,  we 
get 

For  amortization $0 .  70  per  ton 

For  depreciation 0 . 42  per  ton 

Total $1 . 12  per  ton 

Dividing  this  by  140  Ib.,  the  average  amount  of  copper  realized  per 
ton,  we  get  0.8  cents  per  pound  as  the  amount  that  should  be  added  to 
operating  charges  for  plant  account.  I  am  disposed  to  regard  this  as  a 
minimum  figure  and  prefer  to  believe  that  at  least  1  cent,  per  pound 
should  be  added  for  these  charges.  This  would  mean  only  $2,940,000 
in  five  years  for  the  use  of  capital  already  invested  and  for  current  con- 
struction. It  is  to  be  presumed  that  the  company  made  some  profit 
on  treating  custom  ores,  but  as  these  ores  must  have  come  largely  from 
other  mines  owned  by  the  same  group,  it  is  not  likely  that  such  profits 
would  be  sufficient  to  alter  the  calculation  materially.  My  estimate  of 
costs,  then,  for  the  Copper  Queen  is  as  follows; 

Average  operating  cost 8  cents 

Average  capital  cost 1  cent 

Total • 9  cents 

It  will  be  noted  that  the  average  is  exceedingly  close  to  that  figured 
for  Calumet  &  Arizona:  and,  further,  that  a  considerable  rise  was  incident 
to  the  boom  period  of  1900-07. 

MOCTEZUMA  COPPER  COMPANY 

The  figures  on  this  property  are  very  interesting  in  view  of  the  light 
they  throw  on  the  probable  results  to  be  obtained  from  the  Miami,  Ray, 
and  other  new  properties  of  approximately  the  same  grade  and  type. 


268 


THE  COST  OF  MINING 


Year 

Output, 
pounds 

Operating 
profits 

Profits  per 
pound 

Average 
price 

Operating 
cost 

1903 

10,281,970 

456,524 

4.44 

12.6 

8.16 

1904 

11,061,641 

598,992 

5.44 

12.562 

7.178 

1905 

10,160,016 

533,117 

5.25 

14.923 

9.773 

1906 

12,714,716 

1,195,424 

9.4 

17.96 

8.56 

1907 

9,640,390 

833,236 

9.64 

18.1 

9.46 

Five    years 

53,858,751 

3,617,295 

6.7 

15.3 

8.6 

In  this  case  the  plant  investment  is  $3,046,384,  and  the  producing 
capacity  is  now  easily  24,000,000  Ib.  a  year.  Calculating  depreciation 
at  6  per  cent,  we  get  an  annual  charge  of  $182,800  a  year,  equal  to  0.76 
cents  per  pound.  Add  this  to  8.6  and  we  have  9.36  cents  as  the  dividend 
cost.  It  is  very  probable  that  with  the  increased  tonnage  now  possible, 
the  cost  will  average  not  over  9  cents. 

On  a  life  of  twenty  years,  the  plant  may  be  amortized  at  8  per  cent., 
equal  to  about  1  cent  per  pound.  The  selling  cost  may  then  be  put  at 
between  10  and  10j^  cents,  a  figure  that  fully  bears  out  the  conclusions 
arrived  at  from  other  sources.1 


DETROIT  COPPER  COMPANY 

Neglecting  the  explanation  of  details,  it  appears  that  this  company 
earned  $3,467,810  from  86,247,889  Ib.  copper,  equal  to  4  cents  a  pound. 
The  cost  must  have  been  about  11.3  cents.  The  capital  invested  is  only 
$2,158,106,  on  which  depreciation  at  6  per  cent,  gives  an  additional  cost 
of  0.7  cents  per  pound.  The  dividend  cost  may  be  calculated  at  12  cents. 

In  all  of  the  above  calculations  I  have  failed  to  exhibit  the  copper 
equivalent  for  gold  and  silver  contained,  because  the  amounts  are  not 
given.  In  most  of  these  mines,  however,  the  value  of  precious  metals  is 
only  2  to  3  per  cent,  of  the  total,  so  that  the  figures  given  cannot  be  far 
astray  from  this  cause. 

The  progress  during  the  last  ten  years  is  quickly  indicated  by  the 
following  table,  showing  the  production  of  the  different  properties  in  the 
year  1916,  which  is  selected  because  it  was  a  year  when  the  operations 
were  unhampered  by  external  interferences. 

Copper  Queen  Mining  Co 102,685,722  pounds  copper 

Detroit  Copper  Co 17,539,858  pounds  copper 

Moctezuma  Copper  Co 37,789,310  pounds  copper 

Burro  Mount  Copper  Co 8,587,398  pounds  copper 

Bunker  Hills  Mining  Co 59,299  tons  of  ore 

Stag  Canyon  Fuel  Co 1,439,904  tons  of  coal 

1  See  Chapter  XIII,  for  discussion  of  the  cost  of  producing  copper  from  ores  of 
approximately  this  grade  and  type. 


BISBEE 


269 


The  output  of  the  Copper  Queen  smeltery  for  that  year  was  171,893,- 
880  pounds  of  copper  from  1,304,523  tons  of  ore  and  the  total  amount 
produced  from  the  various  mines  owned  by  the  company,  153,263,729 
pounds. 

The  Calumet  and  Arizona  shows  a  similar  growth,  part  of  which  is 
already  indicated,  but  that  company  has  also  undertaken  outside  mining 
enterprises,  the  principal  one  of  which  consists  of  75  per  cent,  of  the 
stock  of  the  New  Cornelia  Copper  Co.,  which  is  now  capable  of  producing 
at  least  50,000,00  pounds  of  copper  a  year,  and  has  acquired  practically 
all  the  ore  in  the  Ajo  District,  the  sum  total  of  which  must  be  about 
70,000,000  tons. 

It  is  very  noticeable  in  studying  the  details  of  mine  operations  that 
the  progress  of  such  consolidations  has  made  those  details  less  available 
than  they  were  ten  years  ago.  The  Phelps-Dodge  Corporation  gives  its 
financial  results  as  a  lump  figure  covering  all  these  mines,  and  the  same 
thing  is  true  of  the  Anaconda  Copper  Co.  Even  the  Calumet  and  Arizona 
reports  are  becoming  less  intelligible  from  the  same  reason.  I  cite  these 
facts  not  as  any  criticism  of  the  management  of  any  of  these  companies, 
but  merely  as  a  indication  of  the  trend  of  affairs  in  the  American  mining 
business.  I  have  long  been  convinced  that  organization  on  such  lines  will 
inevitably  continue  so  long  as  there  is  any  economy  in  it. 

Costs  and  Operating  Details  of  Phelps-Dodge  Properties. — An  ex- 
amination of  the  reports  of  this  corporation  reveals  that  many  interesting 
details  were  published  up  to  the  end  of  1914  that  have  not  been  published 
since.  Although  it  is  my  object  in  this  edition  to  avoid  including  too 
many  tables  of  figures  it  seems  desirable  to  insert  some  of  these  statistics 
for  future  reference,  for  the  reports  containing  this  information  are  not 
now  readily  to  be  had. 

COPPER  QUEEN  MINE 


Tons 

Copper 

Price  copper, 
cents 

Dividends 

Surplus 

1909 

595,624 

84,429,791 

*13 

$4,025,000 

$10,142,620 

1910 

596,193 

76,428,908 

12.826 

6,300,000 

1911 

619,132 

74,489,728 

12.36 

5,200,000 

1912 

786,368 

88,280,908 

15.51 

5,707,351 

1913 

867,481 

97,181,725 

15.37 

5,700,000 

1914 

732,829 

86,066,143 

13.57 

4,500,000 

9,406,691 

6  years 

4,197,627 

506,877,203 

13.77 

31,432,351 

$735,929 

*  Approximate. 

Apparent  earnings,  after  paying  for  depreciation  and  all  plant  ex- 
tensions $30,696,422,  equal  to  a  trifle  over  6  cents  per  pound  copper.  The 
average  price  for  the  period  was  approximately  13.8  cents,  to  which  should 


270 


THE  COST  OF  MINING 


be  added  about  1  cent  for  other  metals  making  the  total  receipts  14.8 
cents.  The  grand  total  cost  therefore  seems  to  be  about  8.75  cents  per 
pound.  The  total  expenditures  were  about  $44,000,000  equal  to  $10.50 
per  ton  shipped  from  the  mines. 

Analysing  these  costs  we  find  that  the  sum  credited  to  depreciation 
for  the  period  is  $3,911,000  for  five  years.  It  was  not  reported  in  1909. 
Probably  the  total  should  be  $4,500,000,  equal  to  about  $1.07  per  ton 
shipped  and  0.9  cents  per  pound  copper. 

The  remaining  costs  therefore  are  about  $9.43. 

The  cost  of  freight  to  New  York,  refining  and  marketing  must  have 
been  about  $6,000,000,  equal  to  1.3  cents  per  pound,  and  $1.57  per  ton 
shipped. 

There  remains  for  mining,  transportation  to  smeltery,  reduction  and 
converting  $8.86.  Converting  probably  cost  about  0.4  cent  per  pound, 
or  50  cents  a  ton,  bringing  down  the  total  to  be  accounted  for  to  $8.36 
per  ton. 

The  cost  of  reduction  is  not  given  but  it  probably  was  not  far  from 
$2.00  per  ton,  this  being  $1.25  for  labor,  power,  supplies,  etc.,  and  75 
cents  for  coke  and  fuel.  The  average  cost  for  mining  then  would  be 
about  $6.35  per  ton. 

There  is  evidence  to  support  the  belief  that  this  cost  was  divided  about 
as  follows: 

Stoping  ore $2.30 

Exploration,  Development,  etc 2 . 00 

Tramming,  Hoisting  and  Loading 0 . 90 

Taxes  and  General 0. 90 

'Freight  to  Douglas 0.25 


Total. 


$6.35 


In  1913  the  report  of  Mr.  Gerald  Sherman,  Superintendent  of  the 
mines,  contains  the  following;  "  Exploration  was  very  active — the  footage 
having  reached  105,937  feet."  "Four  methods  of  stoping  are  practiced, 
the  choice  depending  on  local  conditions."  The  comparative  costs  are; 


Tonnage 

Labor 

Timber 

Explosives 

Total  per 
ton 

In  square  setting  

612,299 

$1  .  555 

$0.473 

$0.085 

$2.113 

In  top  slicing  
In  cut  and  fill  
In  shrinkage  

20,682 
58,239 
3,822 

1.010 
1.170 

0.210 
0.110 

0.080 
0.120 

1.30 
1.40 

694,942 

$1  .  506 

$0.434 

$0.088 

$2.028 

It  will  be  noticed  that  in  this  year  only  about 
per  foot  of  development  work. 


tons  were  shipped 


CHAPTER  XVI 

THE  PORPHYRY  COPPERS 

DISSEMINATED  SULPHIDE  ORES — ORIGIN  OF  THEIR   EXPLORATION — THESE  DEPOSITS 

ARE  PREPONDERANTLY  AMERICAN GEOLOGIC  ORIGIN SURFACE  LEACHING  AND 

SECONDARY  ENRICHMENT PRIMARY  DEPOSITION  NOT  SUPERFICIAL CARBON- 
ATES  MIXED  CARBONATES  AND  SULPHIDES ECONOMIC  DEVELOPMENTS  IN 

RECENT  YEARS POWER CONCENTRATED  CRUSHING OlL   FLOTATION — COPPER 

IN  SIGHT — MIAMI — CHINO,  A  STEAM  SHOVEL  MINE  IN  NEW  MEXICO — RAY  CON- 
SOLIDATED— MOCTEZUMA — CLIFTON — MORENCI — ARIZONA  COPPER  Co. — DE- 
TROIT— NEVADA  CONSOLIDATED — UTAH  COPPER — INSPIRATION. 

Porphyry  Coppers. — The  general  supposition  that  this  form  of  copper 
mining  is  a  new  one  requires  some  qualification.  There  is  no  fundamental 
difference  between  the  western  porphyries  that  have  recently  excited 
general  attention  and  the  Lake  Superior  copper  deposits  which  began  to 
be  worked  about  1846.  I  refer  to  the  operating  conditions  and  not  to 
geological  appearance  of  the  deposits;  this  fact  was  referred  to  in  the 
first  edition  of  this  work. 

However,  it  is  the  development  of  the  disseminated  copper  deposits 
of  the  Cordilleran  region  on  the  western  border  of  North  and  South 
America  that  has  introduced  a  controlling  element  in  the  copper  business 
of  the  world.  The  first  beginnings'of  these  western  porphyries  is  more 
or  less  obscure  because  it  is  difficult  to  say  just  when  and  where  the  first 
distinction  was  made  between  the  ordinary  fissure  vein  deposits  that 
had  been  generally  sought  and  these  particular  disseminated  ores.  It  is 
probable,  however,  that  the  first  mining  of  such  ores  on  any  considerable 
scale,  was  done  in  the  Clifton-Morenci  district  in  Arizona,  and  that  a 
considerable  amount  had  there  been  mined  and  concentrated  before  the 
year  1900.  It  is  also  not  unlikely  that  similar  deposits  were  worked  in 
other  places  by  more  or  less  the  same  methods. 

But  the  beginning  of  extensive  developments  and  of  wide-spread 
interests  in  these  mines  occurred  about  1903,  when  Mr.  D.  C.  Jackling 
succeeded  in  calling  the  attention  of  C.  M.  McNeil  and  Spencer  Penrose, 
who  were  at  that  time  operating  chlorination  mills  at  Colorado  Springs, 
to  the  problem  of  concentrating  and  mining  the  extensive  disseminated 
deposits  at  Bingham,  Utah.  Certain  experiments  indicated  the  proba- 
bility that  ores  running  2  per  cent,  in  copper  might  be  worked  at  a  profit. 
The  result  was  the  formation  of  the  Utah  Copper  Company  and  the  initia- 
tion of  the  project  to  mill  these  ores  on  a  scale  which  took  people's  breath 
away,  for  it  was  decided  to  put  in  a  mill  to  treat  6000  tons  a  day  and 

271 


272  THE  COST  OF  MINING 

even  12,000  tons  a  day  was  talked  of.  About  the  same  time  Messrs. 
F.  W.  Bradley,  J.  H.  McKenzie  and  Mark  Requa  had  their  attention 
called  to  similar  disseminated  deposits  at  Ely,  Nevada  and  exploration 
was  done  in  this  district  in  1904. 

It  is  not  my  purpose  to  trace  in  detail  the  history  of  these  enterprises 
but  merely  to  point  out  the  principal  facts  in  the  development  of  the 
copper  business  and  their  relation  to  the  question  of  costs,  profits  and 
future  production.  In  this  connection  it  is  well  to  bear  in  mind  that  the 
peculiarity  of  the  disseminated  deposits  as  compared  with  the  older 
mines  of  copper  in  the  west,  was  the  immediate  requirement  of  large 
sums  of  money  for  the  necessary  construction  of  plants  and  development 
of  the  properties  before  production  could  begin.  A  necessary  factor  in 
success  was  a  large  scale  of  operations.  Undoubtedly  the  projectors  of 
the  first  porphyry  mines  felt  somewhat  appalled  at  the  risks  they  were 
taking  in  asking  for  the  amount  of  capital  required  to  launch  these 
enterprises. 

At  this  time  a  mill  that  would  concentrate  1000  tons  a  day  was  con- 
sidered a  pretty  large  one,  but  such  a  mill  applied  to  the  low-grade  dis- 
seminated ores  that  were  being  figured  on  would  scarcely  make  any 
profits  at  all. 

There  was  for  a  number  of  years  a  great  deal  of  more  or  less  theoretical 
calculation  as  well  as  practical  experiment  carried  on  regarding  the  best 
means  of  making  these  mines  pay.  While  these  speculations  were  going 
on  it  was  found  that  the  deposits  could  be  explored  rapidly  and  cheaply 
by  means  of  churn  drills  or  diamond  drills,  and  while  plans  for  milling 
plants  were  being  matured  the  amounts  of  ore  indicated  as  available 
frequently  increased  so  much  that  a  mill  of  5,000  or  10,000  tons  a  day 
seemed  justified,  but  it  cost  a  good  deal  of  money  to  build  such  plants, 
vastly  more  money  than  any  of  the  projectors  were  able  to  furnish.  The 
result  was  that  they  had  to  resort  to  bankers  and  to  large  financial  inter- 
ests. The  method  of  securing  funds  was  to  sell  securities  to  the  public. 
In  order  to  make  these  securities  go  it  was  necessary  to  do  a  good  deal  of 
more  or  less  dignified  advertising  in  which  calculations  of  the  amount  of 
copper  in  the  ores  and  in  the  deposits,  the  amounts  to  be  recovered  and 
the  expected  profits  were  pretty  thoroughly  explained.  The  result  was 
that  a  wide-spread  interest  was  aroused  not  only  among  mining  people 
but  among  investors  in  general  in  the  new  mining  projects;  but  as  a  mat- 
ter of  fact,  for  a  period  of  at  least  10  years  it  was  found  that  the  amounts 
of  capital  required  to  bring  the  properties  up  to  a  scale  of  operations  which 
would  create  the  greatest  present  value  were  persistently  underestimated 
and  the  public  was  appealed  to  again  and  again  for  additional  subscrip- 
tions in  stocks  and  bonds.  It  is  probable  that  no  incident  in  the  develop- 
ment of  the  American  mineral  industry  has  been  so  enlightening  to  the 
general  public  in  regard  to  the  nature  of  the  mining  business.  It  seems 


THE  PORPHYRY  COPPERS  273 

worth  while  to  trace  the  investment  of  capital  and  the  operating  results 
of  this  great  group  of  properties  through  to  the  present  time  when  it  may 
be  said  that  all  of  them  are  thoroughly  established. 

It  is  a  remarkable  thing  that  so  far  as  known  these  disseminated 
deposits  are  not  only  entirely  American  but  are  confined  to  the  Pacific 
sea  board  and  belong  to  the  Andean  or  Rocky  Mountain  uplifts.  It  is 
hard  to  see  any  geological  reason  why  similar  deposits  should  not  be  found 
in  other  parts  of  the  world  and  perhaps  they  will  be.  If  so,  the  supply 
of  copper  for  the  next  few  generations  will  no  doubt  be  easily  obtained, 
but,  judging  from  the  fact  that  this  type  of  copper  mine  has  been  well 
known  for  at  least  10  years,  it  may  be  supposed  that  it  has  been  looked 
for  in  other  parts  of  the  world.  The  fact  that  none  has  been  reported 
indicates  at  least  that  they  are  not  so  common  in  the  eastern  hemisphere 
as  in  the  western;  still  there  probably  are  enormous  areas  in  Asia  and 
Africa  that  have  not  been  explored. 

The  American  deposits  are  easily  described  for  they  were  in  all  cases 
produced  by  the  same  geological  agency;  namely,  the  irruption  of  vol- 
canic or  plutonic  masses  through  the  earth's  crust.  These  masses  are 
described  by  the  general  term  of  batholith,  or  deep-rock,  because  they 
have  welled  up  from  unknown  depths.  They  also  have  the  peculiarity 
of  occurring  in  periods  of  general  continental  re-adjustment  such  as 
occurred  at  the  end  of  the  Algonkian  and  also  at  the  end  of  the  Paleozoic 
and  Mesozoic  times.  It  is  not,  I  believe,  clear  in  all  cases,  to  which 
period  of  time  all  of  the  porphyry  deposits  belong,  there  being  in  some 
cases  no  near-by  rocks  of  identifying  age;  but  it  is  probable,  from  all  I 
can  gather,  that  all  of  the  American  deposits  are,  geologically  speaking, 
comparatively  recent,  none  being  known  to  be  older  than  those  of  Bisbee, 
Arizona,  which  may  be  referred  rather  confidently  to  the  Permian  or 
perhaps  to  the  beginning  of  Triassic  times.  The  great  batholith  of 
Butte,  Montana,  is  known  to  belong  to  the  end  of  the  upper  Cretaceous 
and  perhaps  might  be  classed  as  Eocene.  It  seems  probable  that  nearly 
all  of  the  porphyry  deposits  belong  to  one  or  the  other  of  these  two  epochs 
of  batholithic  activity. 

Some  of  these  batholiths  are  of  enormous  size;  the  one  at  Butte, 
Montana,  has  an  area  of  approximately  2000  square  miles  but  this  is  only 
a  moderate  sized  one.  Other  great  ones  scattered  along  the  Cordilleran 
system  are  the  great  Coast  range  batholith  of  British  Columbia  which 
seems  to  have  roughly  an  area  of  45,000  square  miles,  equal  approximately 
to  the  area  of  the  State  of  New  York.  There  is  a  great  one  in  central  Idaho 
with  an  area  of  perhaps  20,000  square  miles;  still  another  along  the 
Cascade  range  in  Washington  and  southern  British  Columbia;  and  the 
great  Sierra  Nevada  batholith,  the  area  of  which  I  have  not  measured. 
I  give  these  figures  to  show  the  immense  power  involved  in  the  line  of 
action  we  are  considering.  Apparently  it  amounts  to  nothing  other  than 

18 


274  THE  COST  OF  MINING 

a  fusion  of  considerable  portions  of  the  earth's  crust.  Whether  this  fusion 
actually  reached  the  surface  in  many  cases  or  whether  it  only  came  near 
the  surface  and  solidified  so  that  the  great  batholithic  masses  have  been 
exposed  by  the  erosion  of  the  remaining  crust,  is  apparently  not  always 
clear.  Undoubtedly  these  fused  masses,  whether  they  appeared  at  the 
surface  in  bulk  or  not,  were  invariably  accompanied  by  volcanic  activity 
of  the  usual  kind. 

The  batholiths  to  which  the  principal  copper  deposits  of  the  Southwest 
belong  are  generally  small,  mere  pygmies  compared  with  the  huge  ones 
just  mentioned.  They  frequently  have  a  total  exposed  area  of  only  a 
few  hundred  or  a  few  thousand  acres.  From  this  it  appears  that  the 
amount  of  economic  mineralization  has  little  or  nothing  to  do  with  the 
size  of  the  intrusions. 

The  accepted  theory  of  the  mineralizations  is  that  they  were  produced 
by  waters  or  gases  driven  off  from  the  molten  masses  in  the  process  of 
cooling  and  solidification.  These  gases  under  enormous  heat  and  pres- 
sure are  believed,  or  known,  to  have  the  power  of  carrying  metals  in 
solution.  With  declining  heat  and  pressure  these  waters  or  gases  are  no 
longer  able  to  carry  the  metals  and  the  latter  are  deposited.  This 
usually  takes  place  when  the  gases  escape  into  the  enclosing  rocks  or  into 
such  portions  of  the  batholiths  as  have  been  already  solidified  at  the 
surface  or  near  the  surface.  This  appears  to  be  a  simple  and  compre- 
hensive statement  not  only  of  the  porphyry  coppers  but  of  practically 
all  sulphide  mineralizations  regardless  of  their  form.  In  fact  the  form 
in  which  the  ore  bodies  occur  apparently  has  little  to  do  with  their  origin, 
but  is  determined  probably  by  mechanical  factors.  Thus  if  the  batholith 
during  its  process  of  cooling  has  been  affected  by  faulting  or  fissuring,  the 
escaping  solutions  will  probably  follow  the  partial  openings  thus  made 
and  minerals  will  be  deposited  in  the  form  of  fissure  veins.  It  may  be 
said  in  passing  that  such  mineralization  never  occurs  in  a  single  isolated 
fissure.  This  might  be  expected  from  the  nature  of  a  fracture  in  a  huge 
mass  of  more  or  less  homogeneous  rock.  The  fracturing  invariably  affects 
a  considerable  area  in  which  there  are  innumerable  interconnected  and 
radiating  fissures.  In  fact,  if  we  look  at  it  broadly  the  earth's  crust 
cannot  be  accurately  described  as  solid  rock.  It  is  more  like  a  rubble 
in  which  the  fragments  may  be  very  large  but  nevertheless  they  are  mere 
fragments  held  together  by  their  own  great  weight  and  the  pressure  of 
surrounding  rocks.  When  a  spring  of  magmatic  waters  is  in  operation, 
penetrating  the  earth's  crust  thus  fissured  from  below,  it  naturally  finds 
some  channels  more  readily  accessible  than  others.  Then  of  course  the 
mineralization  is  irregularly  distributed.  A  mineral  district  is  usually 
an  area  that  has  been  affected  in  this  manner,  usually  from  a  single 
ultimate  source  of  mineralization,  although  at  the  surface  and  from  a 
miner's  standpoint  there  may  be  a  number  of  isolated  areas;  but  in 


THE  PORPHYRY  COPPERS  275 

strongly  mineralized  districts  such  as  Butte,  Montana,  it  is  no  exaggera- 
tion to  say  that  every  ore  deposit  in  the  district  is  connected  with  every 
other  ore  deposit  in  the  district  along  channels  or  along  fissures  that  are 
more  or  less  mineralized,  although  not  always  mineralized  enough  to 
make  an  ore.  In  such  cases  it  appears  to  be  a  geological  impossibility 
to  make  a  clear  distinction  between  one  vein  and  another  vein. 

It  also  happens  that,  apparently,  the  process  of  mineralization  may 
be  intermittent;  depending  perhaps  on  the  forces  that  produce  the  fis- 
suring.  We  may  imagine  that  one  set  of  fissures  tap  the  escaping  waters 
from  a  portion  of  the  magma  and  these  waters  flow  for  a  considerable 
length  of  time  and  produce  mineral  deposits  but  that  the  process  becomes 
quiescent  until  another  rupture  in  the  rocks  re-opens  the  source  of  a 
renewed  flow.  To  refer  to  Butte  again,  this  action  appears  to  have 
been  repeated  3  times  at  least. 

The  porphyry  coppers  are  so  patently  a  phase  of  the  same  action  that 
I  suppose  we  may  say  that  in  every  case  the  disseminated  ore  bodies  have 
with  them  some  development  of  fissure  veins  more  or  less  pronounced. 
In  many  districts  the  mineralizing  batholiths  penetrate  up  to  sedimentary 
rocks  such  as  limestones  which  are  frequently  extraordinarily  favorable 
receptacles  for  the  minerals  carried  from  the  magma  by  the  escaping 
water.  In  such  cases  the  ore  deposits  formed  are  not  disseminated  but 
are  frequently  masses  of  almost  pure  sulphides  in  which  the  predominant 
metal  is  usually  iron,  but  in  which  there  are  frequently  commercial  quan- 
tities of  copper  as  well  as  almost  every  other  kind  of  useful  metal  in  varying 
amounts,  but  in  amounts  almost  always  very  subsidiary  to  the  iron. 
Manganese  also  occurs  in  large  quantities,  sometimes  comparable  to  the 
iron  and  sulphur. 

The  true  porphyry  deposits  are  ores  which  have  been  produced  by 
solutions  permeating  great  volumes  of  rock  rather  uniformly.  I  suppose 
there  is  almost  invariably,  perhaps  quite  invariably,  a  deposition  among 
the  more  or  less  minute  fractures  that  occur  in  all  rocks,  but  in  many 
cases  the  ore  is  disseminated  in  minute  particles  which  seem  to  have 
been  substituted  for  some  of  the  minerals  in  the  original  rock  by  being 
brought  there  by  magmatic  waters  as  they  flowed  through  the  fissures 
or  soaked  through  the  rock  masses  under  pressure. 

The  disseminated  deposits  thus  formed  occur  usually  at  the  periphery 
of  the  intruding  batholith;  sometimes  in  the  enclosing  rocks  as  in  the  case 
at  Miami,  Arizona,  sometimes  in  the  outer  crust  of  the  batholith  as  at 
Ajo,  and  sometimes  in  both.  I  think  it  is  rare  that  the  disseminated 
mineralization  is  found  in  the  solid  core  of  the  batholith,  in  fact  I  have 
never  heard  of  a  case. 

Just  what  the  chemical  causes  for  the  dissemination  of  the  minerals  in 
this  manner  were  is  probably  obscure,  but  at  any  rate  it  has  happened 
on  an  enormous  scale;  in  many  districts  areas  of  several  hundred  acres 
many  hundred  feet  thick  have  been  thus  affected  and  copper  has  been 


276  THE  COST  OF  MINING 

introduced  in  amounts  varying  from  0.2  or  0.3  per  cent,  up  to  2  or  3  per 
cent,  of  the  rock  masses.  When  the  amount  of  copper  is  substantially 
above  1  per  cent,  such  a  mass  becomes  a  commercial  ore  body,  providing 
it  contains  a  minimum,  say,  of  5,000,000  tons,  and  thus  becomes  what  is 
popularly  known  as  a  " porphyry"  mine  or  deposit. 

During  the  past  10  years  a  good  deal  has  been  found  out  about  these 
deposits  that  was  not  fully  realized  during  the  earlier  stages  of  this  in- 
dustry. At  one  time  it  was  generally  supposed  that  this  kind  of  mineral- 
zation  was  superficial.  It  now  appears  that  there  is  no  good  reason  for 
so  regarding  it.  In  the  first  place  it  is  exceedingly  probable  that  all  such 
mineralizations  took  place  at  a  considerable  depth  below  the  surface  and 
that  they  are  now  exposed  merely  by  the  erosion  of  the  rocks  which  were 
once  overlying.  The  depth  at  which  the  deposition  took  place  is  not 
known  so  far  as  I  can  make  out  and  it  probably  varied  greatly  in  different 
places  but  the  general  supposition  among  geologists  is  that  it  occurred  at 
a  considerable  depth,  say  2,000  or  3,000  feet.  Now  such  depth  from  a 
miner's  standpoint  is  not  superficial;  thus  we  may  almost  conclude  that 
none  of  the  porphyry  deposits  are  superficial.  At  any  rate  some  of  them 
have  been  traced  down  to  depths  as  deep  as  2,000  feet  below  the  present 
surface.  At  such  depths  the  difficulty  of  exploring  is  of  course  enor- 
mously increased  and  since  the  amount  of  ores  known  near  the  surface 
is  at  present  large  enough  to  cover  all  immediate  mining  requirements 
no  particular  effort  has  been  made  to  trace  them  deeper,  but  it  is  probably 
a  fair  statement  that  at  present  no  limit  is  known  to  the  depth  at  which 
disseminated  ores  of  this  type  may  be  expected. 

To  make  a  reference  to  the  Lake  Superior  deposits  which  are  from 
a  prctical  standpoint  disseminated  ores,  there  remains  a  question  whether 
their  origin  is  the  same  as  the  ores  under  discussion.  My  own  conjecture 
is  that  the  ultimate  origin  is  the  same  but  that  they  have  been  affected 
by  some  geological  factor,  the  nature  of  which  is  not  understood.  If 
they  are  produced  by  some  variation  of  the  same  causes  they  are  an 
example  of  such  deposits  reaching  the  greatest  depths  known  in  the  mining 
industry,  for  some  of  the  Lake  Superior  mines  are  approaching  6,000  feet 
in  vertical  depth;  and  that  is  not  all,  because  the  present  surface  has  been 
exposed  to  immense  erosion  since  the  deposition  of  the  ores  and  I  would 
take  it  to  be  a  conservative  estimate  that  these  present  commercial  ore- 
bodies  were  deposited  at,  at  least,  twice  the  depths  mentioned. 

To  return  to  the  western  porphyries  we  may  make  a  sweeping  asser- 
tion that  all  the  copper  was  deposited  originally  in  the  form  of  sul- 
phides accompanying  a  large  but  varying  amount  of  silica;  but  upon  this 
original  deposition  two  other  actions  have  been  superimposed.  Copper 
sulphides  are  soluble  and  as  a  deposit  emerged  into  the  atmosphere  by 
the  slow  process  of  erosion  the  atmospheric  waters  penetrating  into  these 
masses  dissolved  the  first  copper  reached  and  carried  some  of  it,  or  all 


THE  PORPHYRY  COPPERS  277 

of  it,  to  a  lower  level  where  it  was  re-deposited  in  the  form  of  the  rich 
sulphide,  chalcocite.  This  action  would  take  place,  and  has  taken  place, 
in  a  vertical  zone  of  200  or  300  feet  in  depth  in  which,  by  the  cumulative 
action  of  such  a  process  maintained  for  an  immense  period  of  time  the 
amount  of  copper  might  have  been  increased  to  5  or  6  times  the  original 
amount.  This  seems  to  have  been  the  case  in  the  great  deposits  of  Miami, 
Arizona  where  the  original  sulphides  apparently  carried  about  0.5  per 
cent,  copper  but  the  portion  thus  enriched  which  constitute  practically 
the  sum  total  of  the  commercial  ore  bodies,  have  been  enriched  to  as  much 
as  3  or  4  per  cent,  in  copper,  the  grand  average  being  perhaps  1.5  to  2 
per  cent. 

This  is  the  well  known  zone  of  secondary  enrichment,  a  conspicuous 
feature  of  practically  all  the  sulphide  mines,  either  of  copper  or  anything 
else,  but  particularly  of  copper.  It  has  always  been  the  object  of  a  vast 
amount  of  discussion  and  investigation.  What  its  chemical  causes  are, 
the  exact  processes  by  which  it  has  been  effected  and  even  is  precise  limits 
are  all,  I  believe,  matters  of  considerable  uncertainty.  At  the  time  the 
first  edition  of  this  book  appeared  it  was  generally  accepted  that  the 
valuable  porphyry  deposits  were  produced  entirely  by  this  action  by 
the  enrichment  of  an  original  mineralization  too  meager  to  pay.  This 
idea  of  course  put  a  limitation  upon  the  expectations  both  of  the  amount 
of  ore  to  be  looked  for  and  its  occurrence  at  any  considerable  depth.  There 
was  naturally  a  justifiable  hesitation  in  basing  important  investments 
of  money  on  anything  less  than  proved  occurrences  of  ore,  but  explora- 
tions made  during  recent  years  have  completely  demolished  the  idea 
that  secondary  enrichment  is  necessary  for  a  commercial  occurrence  of 
porphyry  ore.  Many  of  the  most  important  deposits  have  not  been 
enriched  at  all,  for  instance  the  great  ones  at  Ajo,  Arizona,  those  at 
Nacozari,  Mexico,  at  the  Braden  mines  in  Chile  and  also  at  Chuquicamata 
in  Chile.  It  is  indeed  common  that  ores  or  ore  bodies  that  are  payable 
in  their  primary  stage  have  also  been  affected  by  secondary  enrichment. 
This  is  conspicuously  the  case  at  Chuquicamata  and  also  at  the  Nevada 
Consolidated  at  Ely,  Nevada.  In  the  latter  case  the  paying  ores 
were  originally  thought  to  belong  entirely  to  the  zone  of  secondary 
enrichment. 

The  second  alteration  referred  to  is  the  conversion  of  a  consider- 
able amount  of  the  original  sulphide  ores  into  oxides,  carbonates  or 
native  copper.  The  extent  to  which  this  conversion  has  taken  place  var- 
ies greatly  in  different  cases  and  seems  to  be  some  function  of  the  presence 
of  lime  in  the  original  rocks.  Thus  in  the  presence  of  the  true  limestone 
the  original  copper  does  not  appear  to  migrate  but  is  converted  into  a  new 
carbonate  practically  in  situ.  In  cases  where  the  granite  rocks  in  which 
the  dissemination  has  taken  place  contain  a  good  deal  of  lime-bearing 
feldspar,  the  copper  has  migrated  and  secondary  enrichment  has  taken 


278  THE  COST  OF  MINING 

place,  but  at  the  same  time  large  amounts  of  copper  have  been  fixed  in 
the  form  of  carbonates.  These  carbonates  generally  overlie  the  sulphides 
of  the  zone  of  secondary  enrichment  making  a  kind  of  shell,  not  usually 
very  rich  in  copper  but  containing  on  the  aggregate  enormous  amounts 
of  it.  In  the  case  of  the  Ajo  deposit  a  formation  of  carbonates  was 
produced  affecting  about  15  per  cent,  of  the  original  mass  of  ore,  this 
being  the  superficial  portion  of  it,  without  any  leaching  or  secondary 
enrichment  whatever.  Thus  the  oxidized  portion  lies  immediately  upon 
the  mass  of  primary  ore  and  there  is  no  difference  in  the  content  of 
copper  between  one  and  the  other. 

The  importance  in  a  commercial  sense  of  the  formation  of  these 
oxides  lies  in  the  fact  that  they  do  not  concentrate  in  the  same  manner 
or  on  the  same  terms  as  the  sulphides.  A  certain  amount  of  them  can  be 
recovered  by  the  ordinary  process  of  water  concentration  but  the  recovery 
is  not  good  for  the  reason  that  the  carbonates  and  oxides  are  usually 
fragile  and  easily  pulverized  and  the  specific  gravity  is  rather  low  so  that 
the  finer  particles  are  usually  carried  off.  In  addition  to  all  this  the 
masses  of  disseminated  carbonates  are  usually  pretty  low  grade,  not  often 
being  above  1.25  per  cent,  copper  so  that  a  low  recovery  by  concentration 
does  not  leave  enough  copper  to  make  it  pay.  However,  the  enormous 
quantities  of  such  materials  so  easily  accessible,  being  frequently  right 
on  the  surface  without  any  barren  covering  at  all,  has  made  it  a  great 
object  to  find  a  process  by  which  such  copper  could  be  secured.  This 
problem  has  been  solved  in  two  cases;  namely,  those  of  Ajo  and  Chuqui- 
camata,  by  using  a  leaching  process  by  which  the  copper  in  the  oxidized 
ores  is  taken  up  by  a  solution  of  sulphuric  acid  and  re-deposited  either  on 
iron  or  by  electrolysis. 

This  is  thoroughly  workable  but  it  has  the  same  disadvantage  as  the 
process  of  water  concentration,  in  the  fact  that  it  is  available  only  on  the 
oxidized  ores  and  does  not  deal  with  the  sulphides.  It  happens  that  a 
good  part  of  the  ore  bodies  are  mixed  oxides  or  carbonates  and  sulphides. 
Up  to  date  no  process  has  been  discovered  that  handles  these  adequately, 
but  I  believe  that  various  experiments,  some  of  which  are  being  conducted 
by  the  Bureau  of  Mines,  are  promising  enough  to  lead  to  expectations 
that  this  problem  also  will  be  solved  in  commercial  terms. 

This,  I  think,  is  a  fairly  comprehensive  description  of  the  broad 
features  of  these  deposits,  both  as  to  their  geological  origin  and  their 
commercial  occurrence.  It  remains  to  mention  the  quantities  of  such 
ores  that  have  been  developed  and  to  discuss  the  financial  results  of 
their  exploitation.  It  should  already  be  clear  that  such  ore  bodies  vary 
within  considerable  limits  both  as  to  their  original  content  of  copper  and 
in  the  content  as  determined  by  secondary  enrichment  and  oxidation. 
Thus  in  almost  every  case  certain  portions  of  the  ore  will  be  found  to 
run  as  much  as  3  per  cent,  but  the  other  portions  grade  down  to  only  0.5 


THE  PORPHYRY  COPPERS  279 

per  cent.  The  amount  of  ore  available  is  an  irregular  function  of  the 
grade  that  is  required.  In  the  earlier  stages  of  the  development  it  was 
not  believed  that  ore  much  under  2  per  cent,  would  pay,  therefore  atten- 
tion was  directed  specifically  to  such  portions  as  would  run  more  than  that, 
but  after  large  plants  had  been  established  running  from  5,000  tons  a  day 
upward,  mining  being  done  by  steam  shovels  or  some  other  wholesale 
method,  two  things  were  found  out;  first,  that  money  could  be  made 
from  ores  running  a  good  deal  less  than  2  per  cent,  and,  second,  that  it  was 
a  practical  impossibility  to  keep  ores  that  would  run  2  per  cent,  or  over, 
separate  from  certain  enclosing  or  intervening  masses  that  would  not  run 
so  much.  Thus  as  a  practical  matter  it  was  found  that  the  mass  of 
material  to  be  worked  was  inevitably  much  in  excess  of  the  amounts 
estimated  at  the  initiation  of  the  enterprises  and  it  was  the  equally  uni- 
versal experience  that  the  grade  of  ore  sent  to  the  mill  was  markedly 
lower  than  the  grade  originally  estimated.  The  emergence  of  the  latter 
fact  was  noted  by  some  of  the  operators  at  first  with  dismay  and  in  some 
cases  they  even  hesitated  to  disclose  their  figures  regarding  tonnage 
treated,  hoping,  no  doubt,  to  overcome  the  difficulty  before  the  knowledge 
that  there  was  a  difficulty  would  alarm  the  public,  which  was  the  general 
backer  of  all  these  enterprises.  Part  of  the  rather  disconcerting  low  grade 
of  the  ore  milled  was  due  also,  no  doubt,  to  the  fact  that  the  concentrating 
process  failed  to  give  as  good  a  recovery  as  was  expected.  But  after  all, 
the  outcome  proved  that  the  disappointment  in  yield  per  ton  was  a  negli- 
gible difficulty,  in  fact  no  difficulty  at  all :  first  because  the  operating  costs 
were  low  enough  to  make  a  good  profit  on  the  ore  as  it  was;  second, 
because  it  was  possible  to  increase  the  tonnage  treated  far  beyond  the 
amounts  originally  intended,  and  third,  because  the  lowering  of  the  grade 
was  compensated  several  times  over  by  the  increased  volume  both  of  ore 
and  copper  made  recoverable  by  added  explorations  and  by  taking  lower- 
grade  ores  into  the  definition  of  availability. 

It  may  be  said  that  the  commercial  success  of  the  porphyry  mines  is 
almost  invariably  greater  than  the  original  expectations,  but  this  fact  is 
derived  from  compensating  factors  that  have  been  superior  to  the  disap- 
pointments. The  value  of  a  mine,  of  course,  is  very  largely  a  matter  of 
income,  and  this  income  is  dependent  on  the  output  of  copper.  If  twice 
as  much  copper  is  produced  as  w  as  originally  intended  at  the  expense  of 
handling  three  times  as  much  ore  in  order  to  get  it,  the  income  of  the 
property  is  still  nearly  or  quite  twice  as  much  as  was  originally  contem- 
plated. This  will  depend,  of  course,  on  the  cost  of  operating,  but  with 
increased  tonnage  the  costs  usually  go  down  in  some  proportion.  In  a 
general  way  this  is  exactly  what  has  happened  with  most  of  the  mines. 
In  1906  the  Utah  Copper  Company  expected  to  produce  50,000,000 
pounds  a  year  and  get  a  yield  of  say  26  pounds  of  copper  per  ton.  In 
1909  it  expected  about  75,000,000  pounds  and  got  about  18  pounds  per 


280  THE  COST  OF  MINING 

ton.  In  1916  and  1917  it  has  actually  been  producing  more  than  200,000- 
000  pounds  from  ores  yielding  some  17  pounds  of  copper  to  the  ton.  The 
costs  have  never  been  quite  so  low  as  were  hoped  for  but  the  difference 
has  never  been  very  great  and  the  income  has  been  several  times 
greater;  and  not  only  that,  the  expected  life  of  the  property  by  the 
constant  addition  of  further  ore  supplies  has  remained  as  long  as  ever. 

To  take  another  example,  the  Miami  Copper  Company  in  its 
prospectus  issued  in  1908  planned  for  a  mill  of  1000  tons  a  day,  expecting 
a  yield  of  40  pounds  of  copper  per  ton  and  an  annual  production  of 
14,000,000  pounds.  As  a  matter  of  fact  its  yield  per  ton,  in  spite  of 
all  e-orts  to  keep  it  up,  has  not  been  over  30  pounds,  but  the  milling 
has  lately  been  done  on  a  scale  of  more  than  6000  tons  a  day  and  the 
output  has  been  over  60,000,000  pounds  a  year,  the  costs  being  not  much, 
if  any,  above  those  originally  calculated  upon.  This  we  may  say  is  the 
general  experience  of  this  type  of  property.  At  present  it  is  very  hard  to 
say  whether  the  maximum  output  has  been  reached  or  not.  The  high 
prices  and  forced  production  during  the  war  period  may  have  brought 
many  of  them  up  to  the  maximum  output  which  sound  economic  policy 
would  justify,  but  undoubtedly  many  of  them  have  not  yet  reached  that 
point.  Thus,  it  will  appear  that  from  the  standpoint  of  making  money 
the  controlling  factor  has  really  been  the  development  of  plants  and  equip- 
ment which,  of  course,  means  the  investment  of  capital  enough  to  make  a 
very  large  output. 

During  the  ten  years  which  have  elapsed  since  the  information  was 
gathered  for  the  first  edition,  several  developments  in  industrial  methods 
have  taken  place  which  have  been  exceedingly  valuable  to  the  operation 
of  the  porphyry  mines,  more  particularly  perhaps  in  their  case  than  that  in 
any  other  kind  of  property.  Without  laying  stress  on  the  number  of 
small  things  that  might  be  mentioned,  such  as  improvement  in  rock 
drills  and  similar  mechanical  devices  which  have  contributed  something, 
the  main  factors  have  been  first,  a  development  of  the  oil  flotation 
process;  second,  the  development  of  crushing  machinery,  particularly 
ball  mills;  these  have  not  added  much  of  an  improvement  in  the  matter  of 
operating  costs  over  devices  formerly  employed  but  have  facilitated 
the  fine  crushing  of  enormous  quantities  of  material  by  machines  occupy- 
ing very  small  spaces.  As  an  example  of  this  it  may  be  cited  that  the 
Miami  mill  as  originally  built  was  intended  for  a  capacity  of  2000  tons 
a  day;  it  has  since  been  modified  so  that  6000  tons  a  day  are  being  put 
through  it,  but  the  neighboring  Inspiration  mill,  originally  designed 
to  take  advantage  of  the  possibilities  of  economizing  space  through  the 
use  of  ball  mills,  with  a  floor  space  no  greater  than  that  of  the  Miami 
mill  which  be  it  remembered  was  designed  for  2000  tons  in  1909,  puts 
through  regularly  18,000  tons  of  ore  per  day.  How  much  economy 
of  operating  expense  there  may  be  in  this  economy  of  space  is  perhaps 


THE  PORPHYRY  COPPERS  281 

difficult  to  figure  out,  but  is  is  probably  considerable.  What  is  perfectly 
patent  is  that  there  is  an  enormous  saving  in  plant  construction.  Third, 
a  continued  development  in  the  general  practice  of  substituting  mechanical 
power  for  labor.  This  is  done  not  so  much  by  special  devices  for  econo- 
mizing labor  as  by  utilizing  power  on  a  large  scale  and  producing  power 
cheaply.  This  might  be  illustrated  from  several  other  forms  of  mines 
fully  as  well,  perhaps  better,  than  in  the  porphyries.  The  utilization 
of  power  results  in  great  savings  through  securing  a  large  output  from 
single  units.  Thus  at  present  the  usual  practice  is  to  get  out  several  times 
as  much  ore  from  a  single  shaft  as  was  done  ten  years  ago.  A  conspicuous 
example  is  the  Inspiration  mine  where  a  single  shaft  equipment  employing 
no  more  men  to  run  it  than  the  ordinary  shaft  provides  for  the  hoisting 
of  20,000  tons  a  day.  The  same  thing  has  been  done  in  southeast 
Missouri  where  ten  years  ago  300  tons  a  day  was  considered  a  respectable 
output  per  shaft;  now  1000  tons  per  day  is  only  a  fair  output  and  a 
new  equipment  would  probably  provide  for  from  2000  to  4000  tons. 
The  power  required  to  hoist  a  ton  at  increased  output  remains  as  great 
or  almost  as  great  as  ever,  but  the  equipment  of  one  shaft  both  in  material 
and  personnel  is  hardly  more  than  one-fourth  of  the  equipment  of  four 
shafts.  The  result  is  a  greatly  increased  output  per  man  per  day. 
Another  example  of  the  same  process  is  the  development  of  a  large  type 
of  steam  shovel  which  is  being  used  in  the  Lake  Superior  district  and 
perhaps  among  the  porphyry  mines.  This  new  type  of  shovel  weighs 
about  350  tons.  Before  its  introduction  about  the  largest  machine  in 
use  was  the  90-ton  Bucyrus  shovel.  I  understand  there  is  little  or  no 
economy  in  operating  the  shovel  itself;  but  here  is  the  economy:  The  big 
shovel  removes  a  cross-section  11  times  greater  than  that  of  the  90-ton 
shovel.  Since  every  time  the  machine  is  moved  a  railroad  track  has 
to  be  moved,  it  is  evident  that  the  big  machine  can  be  operated  at  one- 
eleventh  the  former  amount  of  track  construction;  and  that  is  a  very 
considerable  item  in  the  whole  process. 

These  are  illustrations  of  the  general  principle  which  I  think  has 
had  the  greatest  effect  in  the  organization  of  industrial  enterprises  in  the 
past  10  years.  Its  effect  in  the  way  of  reducing  costs,  or  of  increasing 
the  output  per  man,  which  is  the  same  thing,  has  in  many  cases  been 
very  great  indeed.  For  instance,  at  some  mines  in  southeast  Missouri, 
which  are  not  porphyry  mines  but  are  a  convenient  illustration,  the 
cost  of  power  in  1912  was  about  35  cents  a  ton  of  ore  milled.  In  1916 
this  had  been  reduced  to  about  10  cents.  Concurrently  the  output  per 
man  per  day  in  these  properties,  perhaps  not  within  the  period  of  time 
just  mentioned  but  approximately  so,  was  doubled. 

I  have  not  dwelt  upon  the  flotation  process  as  much  as  it  deserves. 
Its  introduction  into  this  kind  of  mines  dates  later  than  the  first  edition 
of  this  book.  I  can  do  little  more  than  point  out  the  general  effect  of 


282  THE  COST  OF  MINING 

it  for  one  very  good  reason:  that  I  know  very  little  about  it  as  a  technical 
matter.  The  process  has  been  in  a  state  of  perpetual  evolution  or 
development.  Even  in  cases  where  the  theoretical  possibilities  are 
pretty  well  worked  out  their  practical  application  has  not  been  always 
perfected.  In  almost  every  case  there  still  remains  a  field  for  the  in- 
troduction of  supplemental  processes  which  will  take  care  of  carbonate 
ores  not  adequately  dealt  with  by  the  flotation  method,  and  also  of  the 
mixed  carbonates  and  sulphides  referred  to  above.  But  in  many  cases 
the  use  of  flotation  has  been  a  tremendous  improvement  over  anything 
that  was  possible  before,  both  in  the  recovery  of  metals  and  in 
the  economy  of  space  and  reduction  of  costs.  Thus  it  may  be  said 
generally  that  a  sulphide  ore  can  be  made  to  yield  easily  90  per  cent, 
of  its  value  by  flotation.  Most  ores  would  not  yield  as  much  as  70 
per  cent,  by  the  water  concentration  processes  of  ten  years  ago.  The 
substitution  of  a  process  that  will  save  90  per  cent,  as  against  one  that 
will  yield  only  70  per  cent,  means  an  increase  of  30  per  cent,  in  the  out- 
put of  metal.  This  is  a  matter  of  overwhelming  importance.  It  is  pre- 
cisely in  the  matter  of  practical  adjustments  required  to  make  an 
actuality  of  this  improved  recovery  that  much  remains  to  be  done.  In 
a  great  many  mines  the  improvements  made  possible  by  flotation  are 
only  about  one-half  realized  on  account  of  certain  mechanical  and 
constructive  difficulties.  Thus  in  some  mills  it  has  not  been  very  easy  to 
substitute  finer  grinding,  which  is  required  for  flotation,  for  the  crushing 
machinery  already  installed.  The  result  is  a  sort  of  compromise  which 
admitted  of  a  large  increase  of  production  at  very  little  expense.  To 
obtain  the  remaining  increase  which  is  patently  possible  there  is  some- 
times the  necessity  of  going  to  great  expense,  perhaps  the  construction 
of  an  entirely  new  plant.  In  many  cases  this  would  pay  but  there  are 
often  good  reasons  for  not  introducing  such  a  project  at  once.  For 
instance  in  times  of  acute  demand  for  the  product  it  is  not  always  easy 
to  get  the  machinery  or  labor  to  make  the  installation.  To  introduce 
such  a  project  might  hamper  the  present  working  of  the  mine.  Then 
again  in  some  cases  the  material  rejected  is  not  finally  lost  but  remains 
available  for  future  working  in  the  form  of  tailings  or  slimes,  which  are 
generally  impounded.  Still  further  there  is  often  a  complication  involved 
in  the  fact  that  the  technical  details  of  finished  operation  are  just  being 
found  out  and  it  may  often  seem  desirable  to  postpone  the  construction 
of  a  thorough  plant  until  further  progress  has  been  made  in  the  art. 
Almost  every  mine  of  any  importance  in  the  world  is  an  example  of  one  or 
all  of  these  considerations.  It  is  fair  to  say  that  a  great  many  changes 
in  milling  practice,  recognized  as  feasible  and  desirable,  have  not  yet 
been  executed.  Unquestionably  the  results  that  would  be  obtained  from 
this  field  are  more  important  than  the  pecuniary  returns  of  any  particular 
property,  for  they  will  open  up  .or  make  available  a  considerable  addition 


THE  PORPHYRY  COPPERS  283 

to  the  visible  reserves  of  copper  and  other  metals.  To  put  the  thing 
concretely,  the  Utah  Copper  Company  is  making  an  output  of  200,000,000 
pounds  a  year,  and  in  order  to  do  so  it  is  milling  13,000,000  tons  of  ore  a 
year  containing  about  325,000,000  pounds  of  copper.  Thus  125,000,000 
pounds  are  permanently,  or  temporarily,  lost  through  milling  and  smelt- 
ing losses,  the  net  recovery  being  about  62  per  cent.  A  substitution 
of  the  recovery  of  say  85  per  cent,  would  mean  an  additional  output 
of  about  75,000,000  pounds  of  copper  a  year.  If  we  apply  the  same 
figures  to  the  whole  amount  of  ore  as  it  originally  stood,  say  400,000,000 
tons,  the  improvement  in  recovery  would  put  an  addition  of  more  than  a 
million  tons  of  metallic  copper  in  sight.  Be  it  remembered  that  this 
amount  is  4  times  the  amount  of  copper  estimated  to  be  commercially 
available  on  this  property  in  1906.  And  this  is  only  an  example  of  the 
state  of  affairs  in  the  whole  field  of  disseminated  copper  mines. 

I  would  not  refer  to  this  matter  with  any  emphasis  were  it  not  for 
the  fact  that  the  recoveries  thus  indicated  are  known  to  be  thoroughly 
possible  and  are  not  visionary  calculations  by  any  means.  Some  failure 
to  secure  all  the  metal  that  there  is  in  an  ore  is  generally  taken  for  granted 
in  mining  practice.  It  is  not  a  matter  of  practical  importance  whether 
the  recovery  is  only  60  percent,  or  not  so  long  as  there  are  no  known  means 
of  improving  it,  but  the  flotation  process  with  the  subsidiary  processes 
that  are  being  developed  to  supplement  it  does  permit  a  vast  improve- 
ment in  mining  practice  and  of  course  it  is  a  new  element  introduced  in 
the  mining  industry. 

The  resources  of  the  " Porphyries"  constitute  a  large  part  of  the 
visible  source  of  this  metal.  A  list  of  17  of  these  mines,  not  a  complete 
list  but  nearly  so,  compiled  by  L.  H.  Taylor,  Jr.  is  given  below.  I  have 
not  examined  critically  the  facts  which  support  these  figures.  Certain 
allowances  must  be  made  in  some  cases  that  I  happen  to  know  of  for 
the  inclusion  of  ores  that  are  certainly  copper  bearing  but  not  certainly 
profitable;  but  whatever  its  shortcomings  it  is  fair  to  believe  that  the 
table  give  a  pretty  good  idea  of  what  to  expect  of  these  mines.  I 
imagine  that  before  they  shall  have  been  entirely  abandoned  they  will 
have  produced  approximately  the  amounts  set  down. 

The  estimates  are  confessedly  too  general  to  make  it  worth  while  to 
add  up  a  total  for  the  amounts,  but  roughly  we  come  to  an  estimate 
of  some  1,950,000,000  tons  of  ore  which  is  expected  to  produce  56,000,- 
000,000  pounds  of  copper.  If  the  estimates  are  at  all  reliable  such  a 
yield  is  not  incredible  in  view  of  the  high  recoveries  made  possible  by 
the  flotation  process.  But  by  past  experience  we  should  not  expect 
so  much,  say  rather  about  20  pounds  per  ton,  or  a  total  of  about 
40,000,000,000  pounds.  It  is  well  to  notice  also  that  more  than  half  of 
all  this  ore  is  in  Chile. 

If  this  estimate  is  worth  anything  we  are  assured  of  the  world's  supply 
of  copper  for  20  years  from  this  one  group  of  mines. 


284 


THE  COST  OF  MINING 
ORE  RESERVES — PORPHYRY  COPPERS 


Company 

Ore  reserve, 
tons 

Average 
grade, 
per 
cent. 

Recoverable 
copper  in  ore 
reserve,  pounds 

Capacity, 
daily 
tonnage 

Life  of 
mine, 
years 

Andes  Copper  Mining  Co. 
Arizona  Bagdad  Copper  Co. 
Braden  Cop.  Mines  Co  .... 
Burro  Mount.  Cop.  Co  .... 
Canada  Cop.  Corp.,  Ltd... 
Chile  Cop.  Co  

110,000,000* 
20,547,500 
263,506,356 
3,835,000 
12,000,000 
697,510,349 

1.40* 
1.44 
2.255 
2.20? 
1.74 
2  12 

2,400,000,000 
503,002,800 
9,954,000,000 
121,492,000 
328,657,200 
24  300  000,000 

15,000z 
3,000z 
6,000 
2,000 
3,000 
11  500 

21 
19 
75J 

5K 
11  ^ 

74  1 

Chino  Copper  Co  

96,552,026 

1  63 

1,992,000,000 

12,500 

22 

Con.  Coppermines  Co  

19,653,034 

1.33 

430,240,000 

1,000 

11  MX 

Howe  Sd.  Co.  (Brit.  Mine)  . 
Inspiration  Con.  Cop.  Co  .  . 
Miami  Copper  Co 

9,787,396 

82,754,277 
54,570  000 

2.16 
1.63 
1  467 

295,970,000 
1,970,000,000 
1,139  000  000 

2,500 
20,000 
6000 

11 

UK 

26 

Nev.  Con.  Cop.  Co  
New  Cornelia  Cop.  Co  
Ohio  Copper  Co.  of  Utah  .  . 
Ray  Con.  Cop.  Co  
Ray  Hercules  Cop.  Co  
Utah  Copper  Co  1 

68,549,644 
51,320,421 
15,000,000 
86,383,642 
9,500,000 
374  040  000 

1.57 
1.58 
0.80 
2.061 
1.77 
1  37 

1,448,000,000 
1,317,800,000 
177,600,000 
2,667,000,000 
269,000,000 
6  672  900  000 

13,000 
5,000 
3,000 
10,000 
1,500 
40000 

15 
29 
14 
24 

17^ 

27 

x  At  enlarged  capacity  of  5,000  tons  daily. 
J  At  enlarged  capacity  of  10,000  tons  daily, 
t  At  enlarged  capacity  of  27,000  tons  daily. 


z  Proposed. 

*  Estimated. 


I  include  the  following  sketches  with  no  pretension  of  describing  this 
business  in  detail,  but  merely  with  the  hope  of  illustrating  the  growth  and 
broad  economic  features. 

Miami  Copper  Company. — The  following  prospectus  was  issued  in 
March,  1908: 

"The  property  of  the  Miami  Copper  Company  consists  of  about  300  acres, 
200  of  which  is  mineral  land,  located  six  miles  west  of  the  city  of  Globe,  Arizona, 
at  which  city  are  the  mines  and  works  of  the  well-known  Old  Dominion  Company. 

"Development  which  is  still  being  carried  on  shows  to  date  2,000,000  tons  of 
concentrating  ore  containing  3  per  cent,  of  copper.  Ore  was  struck  at  a  depth 
of  220  ft.,  and  the  bottom  of  the  shaft,  at  a  depth  of  500  ft.,  is  still  in  ore,  and  the 
area  shown  of  the  ore  body  is  300  ft.  by  350  ft.,  without  having  as  yet  reached  the 
limits,  so  that  the  prospects  are  that  an  enormous  body  of  concentrating  ore  will 
be  developed  as  indicated  by  surface  conditions. 

"The  Gila  Valley  Globe  &  Northern  Railway  ends  at  Globe,  six  miles  distant, 
and  surveys  past  the  Miami  have  been  made  and  right  of  way  secured;  this 
extension  will  pass  within  a  quarter  of  a  mile  of  the  mine.  There  is  abundant 
water  available  for  concentration  purposes. 

"It  is  proposed  to  erect  the  first  unit  of  a  reduction  works,  which  unit  will  have 
a  daily  capacity  of  1,000  tons.  This  will  give  an  annual  production  of  14,000- 
000  Ib.  of  copper,  based  on  350  days  running  time  an  a  yield  from  the  3  per  cent, 
ore  of  2  per  cent.,  or  40  Ib.  of  copper  to  the  ton. 


THE  PORPHYRY  COPPERS 


285 


Concentrating  tests  have  shown  that  the  ore  can  be  readily  concentrated  10 
into  1  and  the  resulting  concentrate  smelted  with  the  above  yield  in  fine  copper.  It 
is  estimated  that  the  cost  of  electrolytic  copper  sold  in  New  York  will  be  9  cents 
per  pound.  On  this  basis  the  profits  at  12  cents  copper  will  be  $420,000  per 
annum,  and  at  15  cents  copper  $840,000  per  annum.  As  developments  advance 
a  second  unit  of  1,000  tons  daily  capacity  will  be  built  which  will  double  the 
above  figures  of  profit. 

"It  is  estimated  that  it  will  require  $750,000  to  erect  the  necessary  first  unit 
of  the  reduction  works  and  that  $250,000  additional  will  be  required  for  mine  plant, 
shops,  buildings,  etc. 

"The  ore  deposit  of  the  Miami  Copper  Company  is  in  nature  similar  to  those 
of  the  Arizona  Copper  Company,  the  Nevada  Consolidated  Copper  Company, 
the  Utah  Copper  Company,  and  the  Boston  Consolidated  Mining  Company; 
that  is,  large  masses  of  ore  in  which  the  copper  as  a  sulphide  mineral  is  dissemi- 
nated through  the  rock  and  which  readily  yields  a  high-grade  concentrate  by 
water  treatment,  which  can  be  easily  smelted. 

"The  mining  is  simple  and  cheap  and  when  found  these  deposits  are  the  most 
valuable  as  copper  producers.  The  Miami  ore,  running  3  per  cent,  in  copper  as 
it  does,  is  higher  in  grade  than  any  of  the  above-mentioned  properties  and  it  will 
without  doubt  prove  a  large  producer  and  dividend  payer." 

During  the  year  which  elapsed  after  this  was  issxied  all  hopes  have 
been  far  exceeded.  There  are  now  13,300,000  tons  of  ore  in  sight 
and  the  company  is  erecting  a  plant  of  2,000  tons  daily  capacity  which  is 
twice  the  original  plan.  It  is  hoped  that  this  plant  will  begin  operations 
in  the  summer  of  1910. 

The  first  six  years  of  operation  showed  the  following  results; 

PRODUCTION 


Year 

Tons 
milled 

Pounds 
copper 

Pounds 
per  ton 

Price  per 
cents  pound 

Receipts  in 
dollars 

1911 

445  036 

14  970  557 

33  6 

13  00 

1  950  669  45 

1912  

1,040  744 

32  477  923 

31  2 

16  60 

5,385,501.53 

1913  
1914  
1915... 

1,058,784 
1,096,633 
1  348  122 

33,134,334 
32,879,447 
41  907  754 

31.3 
30.0 
31  1 

15.25 
13.40 
17  30 

5,049,807.04 
4,389,026  30 
7,262,884  02 

1916  

1,842,017 

54,433,863 

29.5 

24.00 

13,072,440.06 

6  years  

6,831,336 

209,803,878 

30.7 

17.67 

37,710,328.40 

For  the  five  years  preceding  1916,  the  average  price  of  copper  was  15.5 
cents;  and  during  this  period  there  had  been  no  unprecedented  prices. 

The  dividends  paid  during  the  six  year  period  amounted  to 
$9,695,783.75. 

In  addition  to  this  the  quick  assets  had  increased  over  the  beginning 
of  1911  as  follows: 


286 


THE  COST  OF  MINING 


1911 

1916 

Increase 

Ore  
Metals 

$232,410.  11  \ 
395,772  52  / 

5,419,055.75 

$4,790,873.12 

Supplies  
Stock 

182,389.78 
21,661  88 

346,439.22 
101,762  28 

160,049.44 
80  100.40 

Cash  

85,670.68 

1,525,109.03 

1,439,438.35 

Total  

$917,904.97 

$7,392,366.28 

$6,474,461.31 

Combining  dividends  with  the  increase  in  quick  assets  we  have  a  total 
profit  of  $16,170,245.06,  equal  to  7.7  cents  per  pound.  The  apparent 
cost  remaining  is  $20,940,083,  equal  to  9.97  cents  per  pound  copper  and 
$3.05  per  ton  milled. 

Chino  Copper  Co. — An  Open  Pit  Mine.  "The  original  issue  of  first 
mortgage  bonds  amounted  to  $2,500,000.  During  the  year  1912, 
$185,500  par  value  were  converted  into  stock;  during  the  year  1913, 
$2,078,000  par  value  were  converted;  during  the  past  year  all  of  the 
remaining  outstanding  issue  amounting  to  $236,500  par  value,  $235,000 
were  converted  into  stock  and  the  remaining  $1,500  par  value  were  paid 
for  in  cash:  thus  retiring  the  entire  issue."  (Report  of  the  President, 
C.  M.  McNeill,  1914). 


Year 

Deferred 
charges 

Construction 
and 
development 

Working 
capital 

Mining                   T 
property 

Pounds 
copper 

1911 

$541,417       3,760,015 

$640,000 

$1,802,795 

40,000 

986,375 

1912         867,382       4,646,920 

2,359,492 

1.913,719 

1,120,375 

27,776,088 

1913       1,315,454    j    5,580,216 

298,521 

1,916,456 

1,942,700 

50,511,661 

1914  |    1,799,632       6,095,395 

2,427,710 

1,918,101 

1,907,300 

53,999,928 

1915 

2,160,158 

6,634,690 

5,747,130 

1,924,084 

2,379,800 

64,887,788 

Year 

Dividends 

Receipts  from 
metals 

Miscellaneous 
income 

Interest 

1911                 

$131,232 

$85,223                       

1912 

$1,919,070 

4,344,261 

125,133                    $160,397 

1913 

$1,919,070 

7,621,419 

137,533 

69,862 

1914 

2,169,065 

7,247,197 

179,588 

31,832 

1915 

2,609,860 

11,383,777 

229,074 

3,819 

In  all  99,940  shares  of  stock  were  issued  to  convert  the  bond  issue, 
leaving  the  outstanding  capital  stock  at  869,940  shares. 

In  1910,  the  amount  raised  in  cash  for  stock  seems  to  have  been $1,860,000 

1911,  First  mortgage  bonds  and  notes  payable 2,700,000 

1912,  Stock  issue  of  70,000  shares  at  $25 1,750,000 


Total  cash  for  plant  and  working  capital 


$6,310,000 


THE  PORPHYRY  COPPERS 


287 


At  this  date  total  investment  was  about  $7,900,000  so  that  about 
$1,600,000  had  been  added  from  the  production  of  the  mine.  By  the  end 
of  1915,  the  total  capital  accumulation  was  as  follows: 

Deferred  charges  to  operating  (stripping) $2,160,000 

Construction  of  plant,  and  development 6,634,690 

Balance  of  quick  assets 5,747,130 


Total.. 


14,541,820 


If  from  this  total  we  deduct  the  $6,310,000  raised  by  stock  subscriptions 
and  conversions,  we  have  left  $8,311,000  raised  by  operating,  of  which 
$5,747,000  was  liquidatable.  There  remained  nearly  $2,500,000  that  had 
been  put  into  plants,  some  of  which  ought,  probably,  to  be  charged  off  to 
depreciation.  To  make  a  rough  guess  let  us  suppose  that  one  half,  say 
$1,300,000  should  be  so  charged  off.  We  should  still  have  remaining  a 
surplus  for  the  period  of  about  $7,000,000.  Add  to  this  the  dividends 
and  we  have  total  actual  profits  about  $13,700,000  from  a  net  output  of 
198,160,000  pounds  copper,  equal  to  about  6.9  cents  per  pound.  There 
was  paid  in  addition  $265,910  for  interest  on  bonds,  etc.,  which  would  not 
have  been  necessary  had  the  enterprise  been  completely  financed,  so  that 
this  amount  also  was  paid  from  earnings,  bringing  the  total  earnings  up 
to  full  7  cents  per  pound.  The  total  receipts  from  metals  were  $30,727,- 
886  equal  to  15.5  cents  per  pound,  making  miscellaneous  receipts  $756,- 
551  or  0.38  cents  per  pound,  making  total  receipts  15.88  cents  per  pound. 
Deducting  net  profits  of  7  cents  we  have  a  total  cost  of  8.88  cents. 

Ray  Consolidated  Copper  Co. — An  Underground  Mine  in  Arizona. 
This  concern  became  a  copper  producer  in  April,  1911  and  since  then 
has  had  the  following  record. 


End  of 

Net 
copper 

Tons 
milled 

Construction 
equipment 
after 
depreciation 

Mine 
development 

Net  working 
capital 

1911 

14,935,047 

681,519 

$5,743,929 

2,120,491 

842,000 

1912 

34,674,275 

1,565,875 

6,514,675 

3,024,613 

1,364,004 

1913 

52,341,029 

3,365,296 

6,537,514 

3,737,342 

1,505,871 

1914 

57,004,281 

2,427,700 

6,347,846 

4,024,120 

1,970,236 

1915 

60,338,936 

2,848,969 

6,495,274 

4,076,250 

4,055,093 

217,293,568 

9,889,359 

1916 

74,983,840 

3,332,340 

8,001,332 

4,655,381 

9,694,492 

1917 

88,582,649 

3,560,900 

7,927,277 

6,044,968 

11,167,217 

380,859,757 

16,782,599 

• 

288  THE  COST  OF  MINING 

Several  points  in  this  record  are  worth  noting  with  reference  to  general 
principles;  first  the  steady  growth  of  tonnage  treated  and  copper  prod- 
uced for  six  years  after  the  plant  Was  started :  second  the  equally  steady 
growth  of  the  capital  invested  in  construction  equipment  and  develop- 
ment: third  that  the  increase  of  such  capital  did  not  keep  pace  with  the 
output,  but  decreased  from  $6  per  ton  milled  and  28  cents  per  pound  of 
net  copper  produced  in  1912,  to  less  than  $4  per  ton  milled  and  16  cents 
per  pound  of  copper  in  1917. 

Another  point  worth  attention  is  the  growth  of  working  capital  and 
surplus.  Up  to  1915  this  growth  barely  kept  pace  with  the  output  of 
copper  and  there  is  reason  to  suppose  that  the  company  was  during  this 
time  straightened  for  funds,  for  at  the  first  good  opportunity,  1915,  when  the 
price  of  copper  averaged  17.5  cents  a  pound  without  any  increase  of 
working  costs,  the  amount  set  aside  for  working  capital  or  held  in  quick 
assets  was  immediately  doubled.  I  think  we  are  justified  in  believing 
that  under  the  pre-war  conditions  4  cents  a  pound  of  annual  production 
was  the  lowest  permissible  working  capital.  It  is  probable  that  6  cents  a 
pound  was  comfortable.  But  when  the  price  of  copper  mounted  to  over 
26  cents  in  1916  the  company  held  13  cents  pound  on  its  annual  output 
for  this  purpose  and  continued  to  hold  it  through  1917. 

Just  what  reasons  actuate  a  concern  in  holding  a  large  surplus  of 
quick  assets  are  not  always  clear  from  its  reports.  The  inescapable 
reason  for  a  certain  amount  is  of  course,  the  actual  necessity  of  having 
enough  money  to  meet  current  operating  expenses  and  to  carry  the  prod- 
uct through  the  process  of  mining,  milling,  smelting,  shipping  and  refin- 
ing until  it  is  sold;  but  other  reasons  supervene.  It  is  not  uncommon  for 
a  mining  company  to  acquire  a  surplus  of  funds  for  purposes  not  always 
definite  in  the  minds  of  the  directors,  as  for  instance  a  general  intention 
of  buying  further  mining  property,  of  rebuilding  plants,  of  providing  new 
ones  or  of  exploiting  new  processes.  Still  another  reason  comes  to  the 
front  during  periods  of  economic  or  political  disturbance — the  desire  to 
hold  funds  as  a  protection  against  unforeseeable  demands.  During  the 
past  two  years  for  instance,  the  nature,  amount  and  settlement  of  war 
taxes  has  given  rise  to  much  painful  uncertainty  and  withholding  of 
dividends. 

In  the  case  of  Ray  Consolidated  the  amounts  I  have  set  down  for 
working  capital  are  the  net  current  assets. 

The  experience  of  Ray  Consolidated,  illustrates  the  fact  that  the 
completion  of  a  plant,  according  to  its  initial  design,  does  not  put  an  end 
to  plant  expenditure  by  any  means,  but  that  so  long  as  production  is 
increased  plant  must  be  increased  also.  At  the  end  of  1911  this  plant  was 
ready  to  make  an  output  of  35,000,000  pounds,  from  1,565,  000  tons  of  ore 
in  1912.  The  capital  invested  in  plant  and  development  was  then  $7,860,- 
000.  By  the  end  of  1917  an  output  of  88,582,000  pounds  from  3.560.000 


THE  PORPHYRY  COPPERS  289 

tons  of  ore  had  been  reached,  but  the  plant  and  development  account 
then  stood,  including  depreciation,  at  $13,972,000 — an  expenditure  of 
$6,000,000  during  a  period  of  six  years  in  which  about  360,000,000  pounds 
had  been  produced.  The  increase  of  plant  cost  therefore  1.66  cents  a 
pound  of  copper  produced. 

If  we  assume  that  6  cents  per  pound  of  annual  production  is  a  fair 
allowance  for  working  capital  we  should  have  to  estimate  not  less  than 
$3,200,000,  or  about  0.088  of  a  cent  a  pound  would  have  to  be  held  for 
that  purpose,  out  of  earnings.  The  total  amount  required  for  new  capi- 
tal was  therefore  about  2.56  cents  a  pound  over  the  whole  period. 

With  these  data  in  mind  we  may  make  a  fair  estimate  of  the  normal 
operating  costs  and  profits  of  the  enterprise.  For  this  purpose  it  seems 
best  to  take  the  record  only  to  the  end  of  1915,  a  period  during  which 
prices  had  not  reached  any  abnormal  heights.  For  that  period  we  find 
that  217,293,568  pounds  of  copper,  with  a  small  amount  of  gold  and  silver 
had  been  marketed  for  $33,426,525.48  equal  to  15.38  cents  a  pound. 
About  $3,200,000  was  added  to  working  capital,  $3,600,000  added  to 
plant,  and  $4,593,000  paid  in  dividends,  making  a  total  of  nearly  $11,400,- 
000,  or  5.25  cents  a  pound,  leaving  a  gross  operating  cost  of  10.13  cents  a 
pound. 

It  seems,  however,  fair  to  question  the  accuracy  with  which  various 
capital  accounts  are  transferred  to  operating. 

In  1911  the  indebtedness  in  bonds  and  notes  payable  was  $3,950,000 
and  the  capital  stock  $11,991,750.  In  1915  the  indebtedness  had  been 
reduced  to  nothing,  but  the  capital  stock  had  been  increased  to  $15,- 
712,790,  an  increase  of  $3,721,040;  and  a  surplus  accumulated  from  sale 
of  securities  of  $1,451,835,  making  a  total  increase  of  $5,173,375.  If 
from  this  we  deduct  $887,691.19  paid  as  interest  on  bonds,  notes  and  ad- 
vances during  this  period,  we  have  a  remainder  of  $4,305,683.81  net  from 
these  sources.  A  part  of  the  increase  of  capital  was  due  to  the  purchase 
of  the  Ray  Central  Copper  Co.  in  1912,  but  the  reports  leave  us  in  the 
dark  both  as  to  the  number  of  shares  issued  for  that  property  and  the 
amount  of  cash  it  had  in  its  treasury. 

We  find  further  that  an  item  of  $1,606,971.36  came  in  as  "miscellane- 
ous income"  which  must  be  accounted  for,  no  doubt,  before  the  total 
expenditures  can  be  ascertained.  In  all  it  seems  that  the  company  had 
receipts  from  outside  sources  of  nearly  $2,000,000  beyond  the  amount 
required  to  call  in  the  bonds  and  pay  interest  on  them.  It  is  next  to 
certain  that  this  amount  was  more  than  sufficient  to  cover  the  purchase 
of  Ray  Central. 

The  reserves  for  depreciation  seem  low,  amounting  at  the  end  of  1915 
to  only  $878,500  for  five  operating  years  and  at  the  end  of  1917  to 
$1,635,784  for  seven  years,  an  average  of  only  $231,000  a  year.  It  is 
true  that  for  five  years  the  capital  charged  to  plant  and  equipment  was 

19 


290  THE  COST  OF  MINING 

held  nearly  at  level  by  means  of  the  depeciation  charges,  that  during 
this  period  the  tonnage  treated  increased  materially,  and  that  the  rail- 
road, power-plant  and  shops  had  probably  not  depreciated  at  all,  perhaps 
even  enhanced  in  value;  but  it  is  more  than  probable  that  the  milling 
plant  had  suffered  a  very  great  depreciation  and  that  a  fund  should  have 
been  started  for  rebuilding  it.  It  is  not,  indeed,  certain  that  the  plant 
was  not  capable  of  maintaining  the  performance  upon  which  this  financial 
record  is  based.  The  need  for  reconstruction  arose  through  the  de- 
velopment of  a  new  and  superior  mill  design  and  practice  through  the 
exploitation  of  the  flotation  process.  The  need  for  a  new  mill  was  based 
therefore  on  the  expectation  that  it  would  more  than  pay  for  itself  by 
better  recovery  and  cheaper  operation.  So  long  as  we  are  discussing  the 
cost  of  actual  operations  in  themselves,  it  is  unreasonable  to  add  to  them 
the  cost  of  a  different  scheme  of  operating.  There  remains,  however,  the 
probability  that  with  increasing  age  the  expense  of  maintaining  the  plant 
at  its  original  level  of  efficiency  would  increase  and  I  am  inclined  to  doubt 
whether  it  would  be  safe  to  count  on  anything  short  of  replacing  a  milling 
plant  entirely  in  ten  years.  I  should  be  inclined  to  argue  that  a  deprecia- 
tion charge  of  six  per  cent,  on  the  entire  cost  of  construction — railroad, 
power-plant  and  all  would  not  be  excessive;  would  not  in  fact  be  anything 
more  than  anticipating  expenditures  sure  to  be  made  if  the  plants  were  to 
be  kept  indefinitely  in  operation.  If  this  is  true  the  total  amount  charge- 
able up  to  the  end  of  1915,  should  have  been  double  what  was  actually 
charged  and  we  should  be  justified  in  adding  nearly  $900,000,  or  say  0.4 
cent  per  pound  for  additional  depreciation. 

In  the  matter  of  mine  development  also  the  figures  argue  apparently 
for  higher  charges  than  have  been  estimated  Without  going  into  an 
analysis  of  figures,  it  appears  that  for  the  history  of  the  mine  to  date  one 
foot  of  development  was  required  for  50  tons  extracted,  but  that  on 
account  of  the  reserve  of  broken  ore  created  by  caving  the  pillars,  the 
amount  of  development  work  destroyed  is  greater  in  the  earlier  stages  of 
operating  the  mine  than  in  later  stages.  The  smallest  amount  of  develop- 
ment openings  destroyed  has  been  in  1916  and  1917 — one  foot  to  sixty 
tons.  It  remains,  therefore,  a  question  whether  to  charge  development 
work  at  the  rate  of  sixty,  or  only  fifty,  tons  per  foot.  Under  pre-war 
conditions  the  development  work  averaged  $10.50  per  foot,  so  that  we  are 
brought  to  an  estimate  of  from  17.5  to  21  cents  per  ton.  Up  to  the  end  of 
1915  this  estimate  would  amount  to  $1,750,000  to  $2,100,000  against 
$1,113,273  actually  charged.  Thus  we  should  charge  $600,000  to  $1,000,- 
000  additional:  striking  an  average,  say  0.4  cent  per  pound  copper. 

If  we  are  to  consider  this  plant  as  having  reached  a  level  at  which  its 
output  will  remain  stationary  at  about  80,000,000  pounds  a  year,  we 
might  expect  the  performance  under  pre-war  conditions  to  be  about  as 
follows : 


THE  PORPHYRY  COPPERS 


291 


Pi 

i 

Jr  ton              Per  pound 

Operating  cost  —  Mining 
Additional  depreciation 

Addition  i,l  allowance  for 

milling,  smelting,  etc   $ 
of  plants 

2.22              10.13 
[).09                0.40 
3.09                0.40 

development  

Less  miscellaneous  income  i  !         i 

2.40              10.93 
).09                0.43 

Net  cost  application  to  dividends,  say 


2.31 


10.50 


According  to  the  costs  prevailing  in  1915,  a  division  of  the  net  costs 
would  seem  to  be  about  as  follows — Mining  80  cents,  milling  60  cents; 
smelting,  refining  and  marketing  90  cents.  It  is  to  be  noticed  that  the 
last  item  averages  4.1  cents  per  pound  of  copper,  this  from  concentrates 
running  18  to  20  per  cent  copper.  This  is  much  higher  than  the  direct 
cost  of  smelting,  etc.,  to  other  companies  that  produce  concentrates  of 
similar  grade,  but  it  must  be  remembered  that  the  cost  of  building  and 
maintaining  a  smeltery  has  been  saved,  and  there  is  no  reason  to  suppose 
that  the  result  is  unfavorable  to  the  mining  company. 

Moctezuma — Old  Mexico. — This  mine  has  far  outstripped  the 
expectations  held  out  for  it  in  the  Phelps-Dodge  prospectus  of  1909. 


Tons 

Copper 

Development, 
feet 

Grade  per 
cent,  ore 

Earnings 

Dividends 

1909 

510,094 

26,119,000          19,550 

3.22 

$1,104,454 

$  988,000 

1910 

447,555 

22,602,000          21,596 

2.99 

480,690 

1,143,009 

1911 

517,352 

25,511,582          13,668 

3.17 

1,206,182 

754,000 

1912 

596,600 

34,194,000          31,431 

3.49 

2,735,060 

2,118,569 

1913 

603,654 

37,180,000 

31,292 

3.56 

2,402,447 

1,950,000 

1914 

500,000? 

29,591,658          

1,189,100 

1,170,000 

1915 

424,027 

22,889,885            7,572 

3.41 

1916 

715,070 

36,062,201          23,252 

3.27 

1917         750,897 

38,186,451          33,823 

3.18 

5,065,241 

268,336,777 

182,189 

The  number  of  employes  is  not  given. 

The  value  of  gold  and  silver  per  ton  under  pre-war  conditions  was 
about  45  cents.  The  earnings  in  1912  and  1913  were  about  7  cents  a 
pound,  leaving  a  cost  of  about  8.4  cents  per  pound.  Since  the  yield  was 
very  close  to  60  pounds,  the  cost  must  have  been  about  $5.50  per  ton 
milled.  The  development  work  done  is  one  foot  for  25  tons.  The  costs 


292 


THE  COST  OF  MINING 


per  ton  seem  fairly  low.  The  freight  and  treatment  per  ton  of  concen- 
trate could  hardly  be  less  than  $10.00.  The  proportion  of  concentrate  to 
ore  is  about  22  per  cent.  The  cost  of  freight  and  treatment  must  be 
about  $2.25  per  ton  of  crude.  This  leaves  about  $3.25  per  ton  for  mining, 
milling,  depreciation  and  general  expenses. 


How  much  these  costs  have  been  increased  by  the  war  is  not  indicated. 

The  mining  industry  of  Clifton-Morenci  has  been  much  disordered 
of  late  years  by  prolonged  and  repeated  labor  strikes.  The  district  has 
been  producing  less  copper  than  formerly,  or  barely  holding  its  own. 


THE  PORPHYRY  COPPERS  293 

The  ore  has  become  lower  and  lower  in  grade  until  now  it  yields  barely 
40  pounds  to  the  ton;  all,  or  practically  all,  is  disseminated  in  porphyry 
which,  by  the  way,  is,  like  the  Butte  batholith,  or  post-Cretaceous,  or 
Eocene,  age.  For  the  successful  conduct  of  this  kind  of  an  operation  the 
early  history  of  the  camp  is  no  doubt  a  handicap;  for  the  mines  were 
started  and  equipped  on  the  smaller  scale  required  to  work  mines  of 
higher  grade  and  it  has  been  difficult  to  substitute  the  larger  and  simpler 
units  of  the  modern  "  porphyries."  The  mining  is  all  done  underground. 
I  am  informed  however,  that  the  outlook  of  the  distrct  is  not  discouraging 
for  large  bodies  of  ore  running  between  1  and  2  per  cent  copper  have  been 
discovered  in  both  of  the  principal  mines.  The  following  is  retained 
from  the  first  edition: 

The  Clif ton-Morenci  district  produces  prophyry  ore  in  which  chalco- 
cite  is  disseminated.  In  this  respect  the  orebodies  resemble  the  deposits 
of  Bingham,  Utah,  and  of  Ely,  Nev.  The  ores  form  large  irregular  bodies 
at  depths  of  from  100  to  300  ft.  below  the  surface.  In  this  respect  the 
ore  is  easy  to  mine.  But  there  is  a  certain  irregularity,  not  only  in  the 
orebodies  as  a  whole,  but  also  in  their  internal  make-up.  A  certain 
amount  of  sorting  may  be  done  to  advantage  in  the  mines.  The  ore  is 
fairly  hard  and  firm  and  is  taken  out  by  square-setting.  Mexican  miners 
with  white  bosses  are  employed. 

THE  COST  OF  MINING 

Costs  are  not  generally  stated  in  detail,  but  the  reports  of  the  Shannon 
and  Arizona  copper  companies  make  plain  the  following  facts: 

About  1  ft.  of  opening  work  is  necessary  to  find  and  develop  15  tons 
of  ore.  The  cost  of  this  work  is  stated  to  be  21  to  33  cents  a  ton  (Shan- 
non). Stoping  costs  are  about  $2- to  $2.80  a  cents  a  ton  (Shannon). 
Stoping  costs  are  about  $2  to  $2.80  a  ton.  Details  for  one  year  are  shown 
in  an  accompanying  table  (p.  295). 

The  Arizona  Copper  Company  gives  its  costs  for  mining,  including 
deadwork,  ores  purchased,  and  leaching  as  follows:  1904,  $2.81;  1905, 
$2.46;  1906,  $2.50.  It  seems  fair  to  assume  from  this  that  the  under- 
ground costs  are  substantially  the  same  as  the  Shannon.  The  same  may 
be  said  of  the  Detroit  Copper  Company. 

Assuming  that  the  cost  of  mining,  including  development,  is  $2.25 
to  $2.50  a  ton,  and  that  out  of  this  cost  about  50  cents  is  due  to  timbering, 
it  seems  fair  to  say  that  the  excess  over  Lake  Superior  costs  is  due  to  the 
external  factors. 

The  internal  factors  that  govern  the  cost  of  treatment  are  the  losses 
due  to  concentrating,  the  proportion  of  concentrates  to  the  crude  ore  and 
the  smelting  qualities  of  the  ore. 

(1)  The  Shannon  Copper  Company  reports  for  1904  a  saving  of  75 


294 


THE  COST  OF  MINING 


per  cent,  on  ore  averaging  4.16  per  cent.;  in  1905,  73  per  cent,  on  ore  run- 
ning 3.77  per  cent.,  and  in  1906,  69  per  cent,  on  ore  averaging  3.36  per 
cent.  This  saving  is  for  both  smelting  and  concentrating. 

(2)  The  Shannon  Copper  Company  smelted  in  1905,  44  per  cent,  of 
its  total  output;  in  1906,  44 %  per  cent.;  in  1907,  56  per  cent.     The 
Arizona  Copper  Company  smelted  in  1904,  22  per  cent,  of  its  total  output; 
in  1905,  20  per  cent.;  in  1906,  20  per  cent. 

The  costs  for  concentrating,  smelting,  refining,  and  marketing  are  not 
given  in  detail,  but  in  the  case  of  the  Arizona  Copper  Company  these 
costs  lumped  together  where,  in  1904,  $1.90;  in  1905,  $1.93;  in  1906, 
$2.06,  the  costs  being  based  on  the  entire  tonnage  sent  from  the  mine. 
If  the  cost  of  concentrating  is  75  cents  a  ton,  including  transportation 
from  the  mines,  the  cost  for  smelting,  refining,  and  marketing  would 
appear  to  be  about  $6  per  ton  smelted.  On  this  basis  the  cost  to  the 
Shannon  company,  on  account  of  the  larger  proportion  smelted,  should  be 
$1.80  higher  than  to  the  Arizona  company.  This  seems  to  be  approxi- 
mately the  case. 

(3)  Certain  difficulties  have  been  experienced  in  smelting  on  account 
of  a  deficiency  of  sulphur  for  matting  purposes.     This  is  particularly  the 
case  with  the  first-class  ores.     In  the  earlier  days  this  difficulty  added 
more  to  the  cost  than  it  does  at  present. 


SUMMARY  OF  OPERATIONS,  ARIZONA  COPPER  COMPANY 


1904 

1905 

1906 

Total  ore  (tons)         .      ... 

491,600 

547,000 

610,000 

Total  copper  (Ib.)  
First-class  ore  (tons) 

28,732,800 
31  695 

30,080,000 
26,000 

29,756,000 
31,378 

Concentrating  ore  (tons)  .  . 
Copper  per  ton  (Ib.)  

460,000 
57.5 

521,000 
56.3 

578,517 

48.8 

Tons  smelted 

102,893 

108,000 

121,507 

Tons  leached  
Copper  from  leaching  (Ib.)  . 
Copper  per  ton  from  leach- 
ing (Ib.)  

80,100 
2,824,000 

35.3 

90,000 
2,470,000 

26.3 

80,000 
2,126,000 

26.7 

Cost  working  mines  (dead- 
work,     ores     purchased, 
leaching  etc  ). 

Per  Ton 

£285  056  $2  81 

Per  Ton 

£276  326  $2  46 

Per  Ton 

£  373,560  $2.50 

Smelting,      refining,      and 
marketing  
General  
Interest  and  amortization  .  . 

£194,077     1.90 
£14,286     0.14 
£49,162     0.49 

£215,846     1.93 
£14,430     0.13 
£58,965     0.52 

£258,506     2.06 
£15,579     0.14 
£88,765     0.70 

Cost  per  Ib.  at  New  York.  . 

$5.34 
9.3  cents 

$5.04 
8.93  cents 

$5.40 
11.07  cents 

THE  PORPHYRY  COPPERS 
SUMMARY  OF  OPERATIONS,  SHANNON  COPPER  Co. 


295 


1903-4 

1904-5 

1905-6 

1906-7 

Smelting  ore  (tons) 

66005 

53  340 

69,342 

Mill  ore  (tons)  

91,311 

135,503 

140,683 

Total 

157  316 

188  843 

210  025 

209  654 

Per  cent,  copper,  smelted  ore  
Per  cent,  copper,  mill 

5.28 
3  34 

4.70 
3  41 

4.37 
2  86 

Per  cent,  copper,  average  
Copper,  Ib.  saved  per  ton 

4.16 
62  34 

3.77 
55  03 

3.36 
46  41 

47  6 

Per  cent,  saving  
Feet  development 

75.0 

73.0 
11,931 

69.0 
14,740 

14,610 

With  these  facts  the  experience  of  recent  years  is  interesting  by 
comparison. 

DETROIT  COPPER  Co. 


Year 

Tons 

Copper 

Assay  crude, 
per  cent. 

No.  employees 

Output  per  man 
per  year, 
in  pounds 

1909              468,882 

23,991,595 

3.385 

1910 

494,286 

23,056,292 

3.32 

1911 

517,087 

22,704,398 

3.4 

1912 

520,272 

24,802,789 

3.33 

1414 

17,540 

1913 

537,324 

22,255,130 

2.89 

1510 

14,835 

1914 

477,365 

18,060,707 

2.79 

1438 

12,560 

',  1915 

376,604 

15,333,976 

2.83 

1307 

11,800 

1916 

474,808 

17,539,858 

2.60 

1241 

14,000 

1917 

333,263 

13,202,201 

2.73 

1192 

11,000 

The  earnings  reported  were  as  follows: 


Year 

Earnings 

Per  pound, 
cents 

Price, 
cents 

Cost, 
cents 

Dividend, 
dollars 

Dividends  per 
pound,  cents 

1909 

$1,153,269 

5.0 

13.00 

8.0 

$760,000 

3.25 

1910 

1,079,405 

4.6 

12.82 

8.2 

1,960,000 

8.35 

1911 

930,495 

4.1                12.36 

8.25 

800,000 

3.6 

1912 

1,406,170 

5.6                15.51 

9.9 

1,464,610 

6.0 

1913 

1,112,870 

5.0 

15.37 

10.4 

780,000 

3.45 

1914 

602,318 

3.3 

13.57 

10.3 

280,000 

1.6 

$6,284,527 

$6,044,610 

The  statements  of  earnings  have  not  been  published  since  1914. 
the  years  1912,  1913  and  1914  we  may  deduce  the  following: 


For 


296  THE  COST  OF  MINING 

Since  the  cost  of  freight  refining  and  marketing  was  about  1.3  cents 
per  pound  (there  being  no  gold  or  silver  to  speak  of  in  the  ore)  the  cost  of 
producing,  at  the  smeltery,  would  be  about  8.6  cents  per  pound  in  1912, 
9.1  cents  in  1913  and  9  cents  in  1914.  Multiplying  the  copper  produced 
per  man  by  the  cost  per  pound  we  get  the  cost  per  man  per  year  as 
follows: 

1912  17,540  Ib.  at  8.3  cents $1,455 

1913  14,835  Ib.  at  9.1  cents 1,350 

1914  12,560  Ib.  at  9.0  cents 1.130 

If  the  labor  cost  was  60  per  cent,  of  the  total,  we  would  conclude  that 
the  average  earnings  per  man  in  1912  were  about  $870,  in  1913,  $810,  in 
1914,  $700.  In  all  probability  the  earnings  did  not  vary  as  indicated  but 
were  more  likely  at  an  average  of  the  different  figures,  say  about  $800 
per  year. 

The  output  per  man  is  very  low,  being  only  35  to  50  pounds  per  day 
against  100  pounds  at  Bisbee  and  nearly  200  pounds  at  the  Inspiration  for 
the  same  kind  of  operations.  Whether  the  low  wages  are  the  cause  or 
the  effect  of  the  low  output  I  do  not  know.  One  thing  is  very  certain — 
so  long  as  the  production  per  man  is  on  the  present  scale,  the  wages  in 
this  district  must  remain  lower  than  in  the  other  districts  of  Arizona.  If 
the  wages  are  to  be  the  same  as  in  other  camps,  the  business  will  have 
to  be  reorganized  radically  and  the  output  per  man  doubled.  Probably 
this  situation  is  at  the  bottom  of  the  strikes.  The  miners  can  hardly 
be  expected  to  understand  these  things;  they  merely  rebel  against  the 
disparity  of  wages  which  appears  to  them  as  an  injustice. 

The  same  general  facts  hold  true  with  the  Arizona  Copper  Co.  where 
in  1916  the  output  of  copper  per  man  was  only  50  pounds  per  day. 

Nevada  Consolidated  Copper  Co. — This  is  an  example  of  a  steam 
shovel  mine  of  fair  grade.  From  1909  to  1915  inclusive  18,473,000  tons 
yielded  415,848,000  pounds  of  copper,  the  average  value  of  which  with 
included  silver  and  gold  was  15.34  cents  a  pound,  giving  a  total  value  of 
about  $63,660,000,  of  which  however,  only  $58,456,  000  had  been  realized. 

Profits  may  be  expressed  as  follows : 

Dividends  paid $19,975,000 

Increase  of  quick  assets 4,000,000 

Increase  of  deferred  assets 4,000,000 


Total 27,975,000 

This  is  equal  to  6.72  cents  a  pound,  leaving  an  apparent  cost  of  8.62 
cents.  The  yield  was  about  22.5  pounds  per  ton,  giving  a  total  cost  of 
about  $1.96. 


THE  PORPHYRY  COPPERS 


297 


In  1915  the  costs  were: 

Mining 3,081,520  tons 

Freight $  825,072 

Milling 1,641,517 

Smelting  (about  520,000  tons) 1,237,255 

Depreciation 493,043 


Per  Ton 

$1,308,211     $0.425 


4,196,887 
Less  profit .' 764,918 


3,431,969       1.114 


3,431,969 

Freight  and  Refining $926,634 

Commission 112,858      1,039,492         0.337 


$1.876 


SUMMARY  OF  STATEMENTS 
Nevada  Consolidated  Copper  Co. 


Deferred 
charges 

Property  and 
development 

Working 
capital 

Tons 

Pounds 
copper 

1909 

$    140,784 

$9,476,309.53 

$2,510,000 

1,065,387 

34,527.823 

1910 

1,179,111 

17,134,222.42 

2,633,617 

2,237,028 

62,772,342 

1911 

2,117,361 

17,077,330.34 

2,241,872 

3,338,242 

78,541,270 

1912 

2,738,075 

16,748,381.60 

3,324,236 

2,852,515 

63,063,261 

1913 

3,276,397 

14,256,068.76 

3,249,897 

3,139,137 

64,972,829 

1912 

3,739,987 

13,361,672.36 

3,191,444 

2,640,294 

49,244,056 

1915 

4,136,970 

13,027,218.83 

5,732,521 

3,081,520 

62,726,651 

18,473,011 

415,848,232 

By  the  end  of  1918  dividends  had  increased  to  $42.275,000,  being 
$23,300,000  in  the  three  years  of  high  prices,  from  an  output  of  about 
249,000,000  pounds  from  10,800,000  tons  equal  to  more  than  23  pounds 
per  ton.  The  profits  applicable  to  dividends  were  therefore  about  9.5 
cents  per  pound.  The  costs,  figured  on  the  basis  given  above,  were  about 
10  cents  a  pound  in  1916,  13  cents  in  1917  and  over  15  cents  in  1918.  Up 
to  the  end  of  1917  the  total  receipts  had  been  $113,171,000,  from  which 
$37,000,000  were  available  for  dividends.  This  was  from  491,323,000 
pounds  sold  at  an  average  price  of  18.3  cents.  The  net  profit  therefore 
was  7.5  cents  and  the  gross  cost  10.8  cents.  It  will  be  noted  that  the 
gross  receipts  exceed  the  value  of  the  copper  by  a  large  margin. 

Utah  Copper  Company. — This  has  been  for  some  years  the  greatest 
individual  copper  mine,  and  it  has  always  been  the  greatest  of  the  "  por- 
phyries," although  it  appears  that  the  Chile  Copper  Co.  has,  at  Chuqui- 
camata  in  Chile,  a  still  larger  one.  But  with  a  tonnage  in  sight  reported 
at  375,000,000  and  a  plant  capable  of  treating  more  than  12,000,000  tons 
a  year,  it  has  a  long  life  and  a  high  earning  power.  The  yield  per  ton 
seems  to  average  about  17  pounds.  The  average  operating  profits  seem 


298 


THE  COST  OF  MINING 


to  have  been  up  to  the  end  of  1915,  about  5.0  cents  per  pound,  half  of 
which  was  absorbed  in  capital,  fixed  or  working.  From  1908  to  1915 
inclusive  about  760,000,000  pounds  had  been  sold  for  $115,420,000,  equal 
to  15.3  cents  per  pound.  This  leaves  an  actual  cost  of  about  10.3  cents 


a  pound.  What  the  capital  requirements  for  the  future  will  be  it  is  very 
hard  to  determine  but  it  would  seem  as  if  this  great  enterprise  should  be 
nearly  complete  and  that  from  now  on  a  greater  proportion  of  the  profits 
should  go  to  the  shareholders. 

It  requires  considerable  analyzing  to  dissociate  the  affairs  of  the  differ- 
ent parts  of  this  corporation.     It  appears  that  the  company  owns  a 


THE  PORPHYRY  COPPERS 


299 


trifle  over  half  the  shares  of  Nevada  Consolidated  Copper  Co.  From  its 
own  mine  at  Bingham  it  has  produced  up  to  the  end  of  1918  about 
1,350,000,000  pounds  of  copper.  Its  total  dividends  were  $92,000,000 
of  which  presumably  about  $21,000,000  came  from  Nevada,  leaving 
$71,000,000  from  its  own  mine.  Of  this  output  580,000,000  pounds 
were  produced  in  the  three  years  of  high  prices,  and  during  those  years 
the  dividends  were,  from  its  own  ores,  about  $51,000,000,  or  8.8  cents 
per  pound.  For  those  three  years  the  average  price  received  for  copper 
and  associated  metals  was  over  25  cents  a  pound.  The  li practical" 
costs  therefore  which  include  reserves  for  taxes  and  other  emergencies 
must  have  been  about  16  cents. 

Utah  Copper  (in  1908). — The  actual  production  for  eighteen  months 
ending  December  31,  1908,  was  as  follows,  the  figures  being  the  net 
return  free  from  all  smelter  deductions: 

Pounds  copper 

Copper  metal 54,051,212 

Gold,  20,072  oz.  equal  to 3,000,000 

Silver,  163,953  oz.  equal  to 665,000 

Total  metallic  output  expressed  in  copper 57,716,212 

Using  the  round  number  of  57,700,000  Ib.  as  a  divisor,  we  may 
calculate  the  cost  as  follows: 


Dollars 

Approximate 
per  ton 
milled 

Per  Ib. 
copper,  cents 

Operation  (mine  and  mill) 

$2  666  284 

$1    20 

4  448 

Mine  development  
Prepaid  stripping  .  . 

20,028 
121,103 

0.01 

0  06 

0.035 
0  210 

Freight  on  ore  

658,754 

0.32 

1.142 

Treatment  and  refining 

1,806,659 

0  85 

3.131 

Taxes,  etc 

7588 

0  012 

Total  operating  
Add  depreciation,  6  per  cent,  of  plant  cost  .  .  . 

$5,280,416 
387,000 

2.47 
0.12 

9.134 
0.670 

Total  cost  

$5,667,416 

2.59 

9.804 

The  cost  does  not  correspond  to  that  reported  by  the  company 
because,  instead  of  deducting  the  gold  and  silver  from  the  cost  of  copper, 
as  the  company  does,  I  adopt  the  more  logical  method  of  calculating  an 
equivalent  for  the  gold  and  silver  in  copper  metal  and  charging  against 
the  sum  thus  obtained  the  total  costs.  The  addition  of  depreciation  is 
absolutely  essential.  It  is  a  matter  of  experience  in  such  plants  that 
about  6  per  cent,  must  be  allowed  for  renewals  and  changes  that  usually 
have  the  appearance  of  new  construction. 

Furthermore,  in  a  theoretical  calculation  of  complete  costs  we  must 


300  THE  COST  OF  MINING 

add  the  amortization  of  the  plant.  In  this  case  there  is  a  guaranteed 
life  of  twenty-five  years.  This  means  that  the  capital  will  be  retired 
with  5  per  cent,  interest  by  an  annual  installment  of  7  per  cent.  Now 
the  total  capital  required  for  this  business,  outside  of  the  cost  of  the  land 
(which  was  probably  nominal),  averaged  almost  exactly  $5,741,000  on 
which  the  installments  for  eighteen  months  would  equal  $592,805,  equal  to 
a  trifle  over  1  cent  a  pound.  Add  this  to  the  9.8  cents  obtained  above 
and  we  get  10.8  cents  as  the  actual  cost  of  copper  to  date. 

Looking  to  the  future  it  is  not  necessary  to  include  the  amortization 
in  the  calculation  of  dividends.  It  is,  however,  a  vital  necessity  in  cal- 
culating the  cost  at  which  the  mine  can  sell  copper,  for  if  the  owners  were 
to  sell  copper,  to  take  this  example,  at  say  10j^  cents,  because  they  calcu- 
late an  operating  cost  of  9.8  cents,  they  would  be  in  a  fool's  paradise. 
They  would  be  losing  part  of  their  capital;  burdening  themselves  with  the 
conduct  of  a  vast  business  for  less  real  return  than  they  could  get  for 
their  money  by  buying  gilt-edged  bonds  and  doing  nothing. 

But  we  must  remember  that  the  period  we  have  reviewed  is  the  first 
eighteen  months  of  the  mine's  history.  It  is  entirely  likely  that  the 
mine  will  be  worked  out  with  an  annual  production  averaging  75,000,000 
Ib.  The  managers  believe  that  operating  costs  will  be  under  8  cents, 
which  will  change  to  8.5  on  the  basis  I  have  used.  Let  us  agree  to  that 
and  add  an  annual  depreciation  charge  of  $300,000.  Let  us  say  further 
that  the  capital  employed  will  rise  to  a  net  total  of  $8,000,000.  We  shall 
have  then  the  following  costs: 

Operating 8.5  cents 

Depreciation 0.4  cents 

Amortization . .  0.8  cents 


Total  cost 9.7  cents 

This  means  that  8.9  cents  is  the  dividend  cost  and  9.7  cents  is  the 
metal  selling  cost. 

Owing  to  the  great  prospective  importance  of  the  type  of  mine  that 
it  represents,  and  also  because  it  is  an  example  of  a  good  report  to  stock- 
holders, I  have  thought  best  to  reproduce  here  almost  the  whole  report 
of  the  Utah  Copper  Company  for  the  period  of  eighteen  months  ending 
with  the  year  1908.  This  report  shows  better  than  any  other  statement 
I  have  seen,  matters  that  occupy  the  attention  of  the  management, 
the  equipment,  and  plants  required,  and  the  conduct,  in  general,  of  such 
an  enterprise. 

The  problem  involved  is  to  take  a  disseminated  ore  containing  2  per 
cent,  copper  in  the  form  of  chalcocite  from  a  very  large  deposit,  con- 
centrate it  with  a  saving  of  701  per  cent,  into  one  ton  for  every  twenty-two 

1  These  figures  are  not  being  realized.  The  actual  yield  of  refined  copper  does  not 
seem  to  be  over  20  Ib.  per  ton.  This  fact  may  invalidate  my  conclusions  as  to  the  cost 
of  copper  from  this  type  of  deposit.  See  Chapter  X11I. 


THE  PORPHYRY  COPPERS 


301 


tons  mined,  the  concentrate  running  over  30  per  cent,  in  copper.  The 
company  does  not  smelt  its  own  ores,  but  has  it  done  by  contract  by  the 
Garfield  plant  of  the  American  Smelter  Securities  Company. 

The  following  report  is  by  the  general  manager,  Mr.  D.  C.  Jackling: 

UTAH  COPPER  COMPANY 

December  31,  1908 

Income  Account 

54,051,212  Ib.  copper  at  13.36  cents $7,222,406.85 

Debit  difference  in  copper  settlement  for  the  period, 

0.16  cents 87,639.06 

Net  price  applying  for  the  year's  sales,  13.20  cents .  $7, 134,767 . 79 

20,072. 18  oz.  gold  at  $20.00  per  oz 401,443 . 60 

163,952.87  oz.  silver  at  54.76  cents 89,780.33 

Shipments  of  ore  other  than  concentrating 37,877 . 38 

Rents  received 9,300 . 90 

Interest,  freight,  refunds,  sale  of  power,  etc 9,399.36 

$7,682,569.36 

Operation $2,666,284.44 

Mine  development 20,027 . 80 

Prepaid  expense — ore  stripping 121,103.20 

Freight  on  ore 658,754 . 14 

Treatment  and  refining 1,806,658. 52 

State  of  New  Jersey,  Annual  License  Tax 4,005.90 

Extraordinary  tailings  expense,  Bingham  Canyon.  3,581.98 

$5,280,415.98 

Net  profits  for  period $2,402,153.38 

Interest  on  bonds $40,755 . 00 

Dividends  paid 696,387 . 50 

737,142.50 
Net  surplus  for  18  months  ended  December  31, 

1908 $1,665,010.88 

UTAH  COPPER  COMPANY 

RECEIPTS    AND    DISBURSEMENTS 

July  1,  1907,  to  December  31,  1908 
Receipts 

Balance  on  hand  July  1,  1907 $35,802 . 68 

J  Issuance  of  214,150  shares  at  $10.00  per  share 2,141,500.00 

\  Premium  on  sale  of  214,150  shares  at  $10.00  per  share 2,141,500.00 

Received  from  sale  of  bonds 1,500,000 . 00 

Accounts  payable 308,452 . 40 

United  Metals  Selling  Co 991,899.06 

Net  surplus  for  period 1,665,010 . 88 


$8,784,165.02 

A  portion  of  Mr.  Jackling's  remarks  are  now  omitted  and  for  them 
are  substituted  some  extracts  from  the  statements  of  Mr.  R.  C.  Gemmel 
in  the  company's  report  for  1918. 

1  These  items  cover  conversion  of  $4,283,000.00  par  value  bonds  converted  into 

stock  at  $20 . 00  per  share. 


302  THE  COST  OF  MINING 

References  to  the  map  of  the  company's  mining  property  appended  to  this 
report  will  show  the  additional  area  of  fully  and  partially  developed  ore  resulting 
from  the  underground  work  during  the  period.  In  the  report  for  the  year  ending 
June  30,  1907,  the  statement  was  made  that  the  developed  and  partially  devel- 
oped area  amounting  to  seventy-two  acres.  Developments  since  then  have 
resulted  in  extending  this  area  about  eight  acres,  so  that  now  the  known  ore  area, 
fully  and  partially  developed,  is  approximately  eight  acres.  The  ore- thicknesses 
and  values  of  this  additional  territory  are,  generally  speaking,  similar  to  those 
described  in  the  former  report,  so  that  the  new  developments  have  resulted  in 
additional  ore  reserves  to  the  extent  of  about  8,000,000  tons,  or  at  a  rate  during 
the  period  of  over  three  times  the  rate  at  which  ores  were  extracted  for  reduction. 
The  net  result  of  the  developments  we  have  made  during  the  period  has  been  that 
fully  developed  ore  remains  approximately  as  stated  in  our  last  annual  report,  viz., 
20,000,000  tons,  as  the  area  of  this  class  of  ore  has  been  increased  to  an  extent 
that  will  more  than  offset  the  quantity  of  ore  mined. 

The  two  classes  of  partially  developed  ore,  described  in  the  former  report, 
have  been  increased  in  the  aggregate  to  the  extent  of  approximately  8,000,000 
tons,  as  above  stated,  so  that  we  now  estimate  60,000,000  tons  in  these  two  classes 
of  reserves.  In  other  words,  of  fully  developed,  partially  developed  and  reason- 
ably assured  ore,  the  total  amounts  to  about  80,000,000  tons.  Of  this  total 
tonnage,  65,000,000  tons  can  be  classed  as  of  the  better  or  normal  grade,  aver- 
aging about  2  per  cent,  copper,  and  15,000,000  tons  as  of  the  lower  grade,  approxi- 
mating \l/i  per  cent,  copper.  In  addition  to  this,  we  have  the  lower  zone,  as 
described  in  the  previous  annual  report,  the  average  value  of  which  has  been 
indicated  to  only  a  limited  extent  by  diamond  drilling,  but  which  is  estimated 
contain  a  minimum  of  40,000,000  tons  that  will  probably  average  \y%  per  cent. 
In  discussing  the  above  quantities  throughout,  consideration  should  be  given  to 
the  fact  that  the  stated  figure  include  the  quantities  of  ore  mined  during  the  fiscal 
period.  This  would  amount,  in  percentage,  to  approximately  3  per  cent,  of  the 
above  described  three  classes  of  ore  aggregating  80,000,000  tons  reserves. 

All  the  development  done  during  the  period  has  been  on  the  easterly  end  of 
the  property  and  on  both  sides  of  the  canyon,  but  the  larger  part  of  it  has  been 
on  the  south  side  of  the  canyon,  in  the  southeasterly  portion  of  the  company's 
territory.  The  ore-bearing  area  is  still  being  extended  in  that  direction. 

Stripping. — Stripping  operations  since  their  commencement,  in  August, 
1906,  have  resulted  in  the  removal  of  1,705,322  cu.  yd.  of  capping.  Of  this 
amount,  1,335,233  yd.  have  been  removed  during  the  fiscal  period  under  discus- 
sion. During  the  first  six  months  of  the  fiscal  period,  367,950  cu.  yd.  were  re- 
moved; during  the  second  six  months,  446,460  cu.  yd.  were  removed,  and  during 
the  last  six  months  of  1908,  520,823  cu.  yd.  were  removed. 

The  total  area  over  which  stripping  operations  have  been  conducted  to  date 
is  19.7  acres.  The  average  thickness  of  capping,  as  disclosed  by  these  operations 
remains  the  same  as  that  stated  in  our  last  annual  report  approximately  70  ft., 
corresponding  to  113,000  cu.  yd.  per  acre.  The  total  amount  removed  is,  there 
fore,  equivalent  to  stripping  of  approximately  15  acres,  and,  at  the  present  time, 
the  actual  area  completely  stripped  is  slightly  in  excess  of  7  acres. 

The  average  cost  of  stripping,  throughout  the  entire  operations  from  their 
beginning  in  1906,  has  been  approximately  32  cents,  per  cubic  yard;  this  cost 
covering  only  the  removal  of  capping  and  its  conveyance  to  available  dumping 


THE  PORPHYRY  COPPERS 


303 


ground.  Applying  this  cost  to  the  average  thickness  of  stripping  removed  and 
ore  uncovered,  the  cost  per  ton  of  ore  uncovered  is  somewhat  less  than  4  cents. 
Stripping  operations  have  been  more  expensive  and  difficult  in  the  past  than 
they  will  be  in  the  future,  on  account  of  the  very  limited  area  upon  which  the 
shovels  could  work  and  the  expensive  tracks  it  was  necessary  to  build  in  starting 
these  operations  in  the  narrow  canyon.  As  we  develop  more  room,  the  rate  at 
which  shovels  can  operate  will  be  increased,  and  the  cost  of  shoveling  correspond- 
ingly reduced;  but  the  expected  decrease  in  the  actual  cost  of  loading  the  material 
will  probably  be  offset  by  the  increased  cost  of  outing  the  waste  material  for 
greater  distance,  so  that  it  may  be  expected  that  our  stripping  costs  will  remain 
about  the  same  as  in  the  past." 

REPORT  OF  1918 

Ore  Reserves. — At  the  end  of  the  year  1918,  an  ore  area  of  226.3 
acres  had  been  outlined  by  underground  workings  and  churn  drilling. 
No  attempt  was  made  to  add  to  this  area,  but  some  drilling  was  done 
in  order  to  obtain  data  for  future  steam  shovel  operations.  The  churn 
drilling,  however,  increased  the  calculated  average  thickness  of  developed 
and  partially  developed  ore  from  508  feet  to  556  feet. 

Revised  calculations  show  that  at  the  end  of  the  year  there  was 
developed  in  the  property  453,421,400  tons  of  ore,  averaging  1,375  per 
cent,  copper,  of  which  quantity  270,000,000  tons  are  classed  as  fully 
developed  and  183,421,400  tons  as  partially  developed.  There  was  mined 
from  the  entire  property  prior  to  January  1,1919,  a  total  of  79,308,140 
tons  of  ore,  averaging  1.397  per  cent,  copper,  and  the  reserves,  therefore, 
amount  to  374,040,000  tons  averaging  1.370  per  cent,  copper.  The 
year's  addition  to  reserves  was  2,288,000  tons  in  excess  of  the  tonnage 
mined  during  that  period. 

The  net  value  of  the  gold  and  silver  recovered  was  0.795  cent  per 
pound,  and  the  miscellaneous  income  in  Utah,  including  that  from  the 
Bingham  &  Garfield  Railway,  amounted  to  1.003  cents  per  pound. 
The  operating  costs  on  concentrating  ore,  including  all  fixed,  general  and 
maintenance  charges  for  the  years  1910  to  1918,  inclusive,  are  shown  in 
table  below: 


Year 

Tonnages 

Mining 

Transportation 

Milling     . 

Total 

1910 

4,340,245 

$0.4097 

$0.2978 

$0.4663 

$1  .  1738 

1911 

4,680,801 

0.4479 

0.3078 

0.4168 

1  .  1725 

1912 

5,315,321 

0.4233 

0.2848 

0.4158 

1  .  1239 

1913 

7,519,392 

0.3288 

0.2797 

0.3676 

0.9761 

1914 

6,470,366 

0.3232 

0.2782 

0.3536 

0.9550 

1915 

8,494,300 

0.2441 

0.2781 

0.3402 

0.8624 

1916 

10,994,000 

0.2781 

0.2792 

0  .  3782 

0.9355 

1917 

12,542,000 

0.4446 

0.2794 

0.6930 

1.4170 

1918 

12,160,700 

0.5370              0.2983 

0.9277 

1.7630 

304  THE  COST  OF  MINING 

STATEMENT  OF  OPERATIONS 
For  the  Year  Ended  December  31,  1918 
Operating  Revenue: 
Copper  Produced— 188,092,405  Ib.  @  22.876c ....     $43,029,021 . 49 

Gold  Produced—  50,928,217  oz.  @  $20 1,018,564.34 

Silver  Produced— 489,483.74  oz.  @  97.561c 477,543.66    $44,525,129.49 


Operating  Expenses: 

Mining  and  Milling  (including  Taxes) $17,076,992 . 59 

Treatment,  Refining  and  Freight 12,066,465 . 78 

Selling  Commission 303,918 . 71 

Stripping  Ore 1,235,057 . 50 

Mine  Development 35,392.26     $30,717,826.84 


Net  Income  from  Operations  plus  Depletion $13.807,302 . 65 

Miscellaneous  Income  and  Receipts: 

Dividends  on  Investment $  1,600,300.00 

Capital  Distribution — Nevada  Consolidated 2,651,325 . 00 

Other  Income  from  Interest,  Rentals,  etc 886,852. 31       $5,138,477.31 


Total  from  all  Sources $18,945,779. 96 

Other  Charges: 
For  Contributions  to  Red  Cross  and  United  War 

Work  Funds 500,000.00 


Balance  to  Surplus  Account $18,445,779.96 

SURPLUS  FROM  OPERATIONS 

Balance— December  3i,  1917 $48.293,528.23 

Net  Income  and  Proceeds  of  Depletion 18,445,779.96 


$66,739,308.19 
Less: 

Dividends $12,589,797.50 

Capital  Distribution 3,655,102.50     $16,244,900.00 


Balance— December  31,  1918 $50,494,408.19 

CONSOLIDATED  STATEMENT  OF  ASSETS  AND  LIABILITIES 

ASSETS  December  31,  1918  December  31,  1917  Increase 

Mining     and      Milling 

Properties  and  Equip- 
ment   $27,835,991.61  $24,172,445.85 

Railway  Properties  and 
Equipment 8,323,984 . 33  7,849,012 . 35 


$36,159,975.94  $32,021,458.20 
Less — Reserve  for  De- 
preciation                 4,542,125.08  3,385,758.53 


$31,617,850.86  $28,635,699.67  $2,982,151.19 

Investments 5,609,425.22  5,604,002,23  5,422.99 

Patents     and     Process                                      312,694.00  300,000.00  12,694.00 

Rights 

Deferred     Charges     to 

Operations 8,943,523 . 85  8,300,040 . 34  643,483 . 51 


THE  PORPHYRY  COPPERS  305 

Current  Assets:  Increase 

Cash $8,771,328.78  $11,533,737,92 

Cash  due  in  January 
for  December  Copper 
Deliveries 3,695,141.86  3,962,156.56 

Marketable  Securities      12,458,312.82  4,869,283.00 

Accounts  Receivable, 
Prepaid  Insurance, 
etc 833,715.68  395,825.55 

Notes  Receivable 10,800.00 

Metals  on  Hand  and 
in  Transit 8,709,791.16  13,166,994.92 

Materials  and  Sup- 
plies   4,549,755.44  5,084,139.12 


39,018,045.75  39,022,937.07          4,891.32" 


$85,501,539.68  $81,862,679.31  $3,638,860.37 


LIABILITIES 
Capital      Stock      Out- 
standing   (Utah    Cop- 
per Company) $16,244,900.00  $16,244,900.00 

Current  Liabilities: 

Accounts  Payable $  1,105,077.03  $  1,523,244.84 

Accrued        Treatment, 
Refining  and  Delivery 

Charges 2,390,112.53  1,930,009.77 

Reserve  for  Taxes,  Ac- 
cident Insurance, 
etc 6,620,785.46  5,327,475.06 


10,115,975.02  8,780,729.67  $1,335,245.35 

Surplus  from  Sale  of  Se- 
curities   $8,290,620.00  $8,290,620.00 

Surplus  from  Opera- 
tions   50,840,044.66  48,546,429.64 


59,140,664.66  56,837,049.64     2,303,615.02 


$85,501,539.68  $81,862,679.31  $3,638,860.37 

*Decrease. 

BINGHAM  &  GARFIELDS  RAILWAY  COMPANY 

Construction  and  Improvements. — The  total  increase  in  length  of 
all  tracks  was  14.18  miles.  A  large  part  of  the  additional  mileage  was 
for  the  track  layout  in  connection  with  the  new  car  dumper  at  Arthur. 
The  mileage  at  the  end  of  the  year  1918  is  shown  in  table  below: 

Main  Line  and  branches  between  and  in  the  vicinity  of  Garfield  and 

Bingham 37. 136  miles 

Yard  and  Siding  Tracks,  including  all  the  terminals 52 .769  miles 

Additional  tracks  leased  to  Utah  Copper  Company 43.458  miles 

Total  length  of  tracks 133.363  miles 

Other  improvements  include  a  new  scale  house,  new  office  building 
for  superintendent  at  Magna,  extensions  to  the  engine  house  and  back 
shop,  and  some  additional  necessary  tools  and  machines  for  the  shops. 
One  Mallet  articulated  compound  locomotive  and  four  outfit  cars  were 
added  to  the  equipment. 

20 


306  THE  COST  OF  MINING 

Operations. — A  total  of  12,439,394  tons  of  freight  was  transported, 
being  an  average  of  34,081  tons  daily,  compared  with  12,648,225  tons 
and  34,653  tons,  respectively,  for  the  year  1917.  A  total  of  10,949,278 
tons  of  ore  was  shipped  by  the  Utah  Copper  Company;  368,473  tons 
by  other  mining  companies  in  Bingham,  and  26,484  tons  by  mining 
companies  in  Nevada  through  the  Western  Pacific  connection,  making  a 
total  of  11,344,235  tons  of  ore.  The  remaining  1,095,159  tons  was 
commercial  freight,  as  compared  with  1,069,894  tons  of  such  freight 
transported  during  the  previous  year.  A  twice-daily  passenger  train 
was  operated  between  Salt  Lake  City  and  Bingham  in  connection  at 
Garfield  with  the  Los  Angeles  &  Salt  Lake  Railroad.  The  total  number 
of  passengers  carried  was  617,749,  as  against  671,004  for  1917. 

Inspiration  Consolidated  Copper  Company. — If  the  Utah  Copper  is 
the  most  conspicuous  open  pit  mine  of  the  porphyry  group,  Inspiration 
is  certainly  the  most  interesting  underground  mine.  To  illustrate  this 
I  find  it  difficult  to  choose  between  the  singularly  terse  and  energetic 
reports  of  Mr.  C.  E.  Mills  who  was  general  manager  during  the  formative 
period.  I  select  that  for  1916  with  one  or  two  remarks  in  that  of  1915 — 
I  quote  the  latter  first. 

Three  years  prior  to  the  starting  of  production  at  Inspiration  roughly 
100,000,000  tons  of  ore,  seventy-five  million  of  which  was  sulphide, 
had  been  developed  by  churn  drilling.  A  comparatively  negligible 
amount  of  underground  work  was  done.  To  prepare  and  equip  the 
property  for  the  mining  and  concentration  of  5,000,000  tons  of  sulphide 
ore  per  annum — roughly  14,400  tons  daily  capacity — an  expenditure  as 
follows  may  be  set  down: 

Cost  per  ton  of 
daily  capacity 

Equipment  of  mine  and  mill,  including  water  supply,  power,  mill  sites, 

tailings  lands,  railroads,  etc $625 

Advanced  mining  expenditures  to  prepare  for  an  output  of  14,400  tons 

per  day 208 


$833 

The  advanced  payments  for  mining  will  appear  at  the  proper  time 
in  the  mining  costs. 

A  considerable  part  of  the  plant  equipment  expenditures  will  last 
the  life  of  the  mine.  Improved  metallurgy  will  doubtless  justify  re- 
placements of  other  parts.  The  oxide  ores  will  probably  call  for  a  treat- 
ment method  of  their  own. 

The  operating  costs  at  Inspiration  for  mining  and  milling  will  probably 
be  from  $1.00  to  $1.15  per  ton  of  ore,  possibly  nearer  the  former  figure. 
While  a  yield  of  more  than  20  Ibs.  per  ton  of  ore  can  be  obtained  from 
much  of  the  ore,  a  better  mining  practice  can  be  followed  and  more  ulti- 
mate profits  obtained  by  mining  ore  producing  20  lb.  on  the  average. 


THE  PORPHYRY  COPPERS  307 

I  herewith  submit  a  report  of  operations  at  the  Company's  mines  for  the  year 
1916 — the  fifth  annual  report  since  the  organization  of  your  company  and  its 
acquisition  of  the  Live  Oak  and  Inspiration  Mines  in  March,  1912,  and  the  first 
report  covering  a  full  year's  activities  in  the  production  of  copper. 

A  very  brief  review  of  the  time  intervening  between  March,  1912,  and  the 
close  of  the  past  year  may  be  of  interest.  The  character  of  the  work  under 
way  suggests  three  divisions  of  the  total  interval. 

First  Period.— March,  1912,  to  June  29,  1915  (when  the  first  unit  of  the  mill 
started).  This  was  a  period  of  plant  construction  and  underground  development. 

At  the  beginning  of  this  period  the  mines  had  already  been  developed  by 
churn  drills  but  only  very  slightly  by  underground  work. 

The  second  quarter  of  1912  was  occupied  in  the  selection  of  a  mill  site,  its 
purchase  together  with  suitable  lands  for  tailings  storage  and  with  negotiations 
for  hydroelectric  power. 

In  July,  1912,  active  underground  work  was  started. 

On  August  2,  1912,  the  first  grading  contract  (for  the  railroad)  was  let. 

On  November  3,  1912,  the  first  grading  actually  began  on  the  mill  site. 

On  January  1,  1913,  Flotation  tests  began  in  ten  ton  plant  and  continued 
for  six  months.  In  following  six  months  a  700  ton  (daily  capacity)  flotation  test 
mill  was  built. 

On  January  1,  1914 — 700  ton  flotation  test  plant  started — ran  until  June  29, 
1915,  treating  257,000  tons  ore. 

On  July  30,  1913,  the  first  concrete  was  poured  for  surface  structures. 

Twenty-three  months  later  the  first  unit  of  the  mill  was  started. 

Seven  and  two-thirds  months  following  this,  the  last  or  eighteenth  unit  of 
the  mill  was  started. 

Meanwhile,  the  main  shafts  were  sunk  and  equipped,  the  power  house,  rail- 
road, etc.,  built,  and  the  water  supply  developed  and  equipped. 

53.7  miles  of  underground  openings  were  driven  to  operate  the  mine. 

6,858,000  tons  of  ore  were  developed  by  churn  drilling  in  the  Live  Oak. 

7,500,000  tons  of  ore  were  acquired  by  purchase  of  Keystone  group  of  claims. 

Second  Period—  July  1, 1915,  to  December  31, 1915— Covering  construction  work 
on  unfinished  units  of  the  mill  and  operation  of  mine  in  connection  with  the  finished 
units  of  the  mill.  Production  of  copper  during  this  period  20,445,670  pounds. 

Third  Period.— The  full  operating  year  of  1916. 

In  1916,  mining  operations  of  the  Company  were  substantially  confined  to 
the  Inspiration  Division.  The  Keystone  property  was  not  worked  at  all  and  the 
Live  Oak  and  Cordova  group  only  to  a  very  limited  extent  in  supplying  with 
silicious  oxidized  ore  the  small  market  furnished  by  the  International  Smelter 
for  this  class  of  material.  The  concentrator  was  fully  supplied  from  the  stopes  of 
the  Inspiration  Division. 

In  all  5,353,880  tons  of  ore  were  mined  during  the  year,  21,289  tons  being  the 
maximum  for  any  single  day. 

The  average  output  of  ore  per  shift's  work  chargeable  to  the  Mining  Depart- 
ment was  17.46  tons. 

The  area  covered  by  the  undercutting  of  ore  was  18.4  acres. 

28  miles  of  underground  openings  were  driven  and  31  miles  of  such  work  were 
destroyed  in  the  caving  operations. 

Details  are  as  follows: 


308 


THE  COST  OF  MINING 


TONS  ORE  MINED 

*Milling  ore 5,332,058  From  Inspiration  Division 

*  Includes  200,859  tons  reclaimed  from  dumps  by  driving  branch  raises  from  the 
mine  below,  and  drawing  ore  down  to  the  mine  haulage  ways. 

Silicious  ore  sent  to  Smelter 1,969  From  Inspiration  Division 

Smelting  ore  direct  to  Smelter 18  From  Black  Copper  Claim 

Oxide  ore  direct  to  Smelter 9,473  From  Live  Oak  Division 

Oxide  ore  direct  to  Smelter 10,362  From  Cordova  Group 


Total 


5,353,880 

DEVELOPMENT  WORK  UNDERGROUND 


Openings 
driven  to 
beginning 
of  1916, 
miles 

Driven 
during 
1916, 
miles 

Total 
driven 
to  end  1916, 
miles 

Destroyed 
by 
stoping 
operations 
to  end  1916, 
miles 

Mine 
openings 
end  1916, 
milrs 

Haulage  Ways  

7   61 

0.98 

8.59 

0.26 

8.33 

Ordinary  sized  drifts  
Main  Raises      ...        

22.69 
23  20 

7.09 
7.45 

29.78 
30.65 

11.79 
5.69 

17.99 
24  .  96 

Finger  Raises 

8  93 

12  55 

21  48 

13  25 

8.23 

Shafts                                .    . 

1  21 

1.12 

0.17 

1.04 

Misc  

0.21 

0.21 

0.21 

63.85 

28.07 

91.92 

31.16 

60.76 

The  refined  copper  returnable  by  the  Smelter  as  the  result  of  all  ore  treated 
in  1916  was: 

Pounds  copper 

From  concentrating  ores 119,431,389 

From  oxide  ores  sent  direct  to  Smelter 1,341,248 


120,772,637 


The  cost  of  copper  derived  from  concentrating  ores  was : 


Cost  per  pound 

Cost  per  ton  ore 

Mining.  .  .            .      .                            

2  .  702c 

$0.60708 

Coarse  crushing 

0.125 

0.02798 

Ore  hauling   .                                                 

0.069 

0.01540 

Concentrating  and  royalty 

2.243 

0.50385 

Concentrate  hauling     .                                  

0.006 

0.00145 

Smelting,  freight,  refining,  marketing,  etc.,  etc.  .  .  . 

5.145 

3.528 

1.15576 
0.79269 

8.673 
119,431,389  Ibs. 

1.94845 
5,316,350  tons 

THE  PORPHYRY  COPPERS 


309 


It  is  estimated  that  for  each  1000  tons  of  ore  mined  there  will  have  to  be 
driven  (including  the  original  preparatory  work)  13  feet  of  ordinary  sized  drifts, 
20  feet  of  main  raises  and  1.4  feet  of  haulage  ways,  making  a  charge  for  this  ac- 
count of  approximately  20  cents  per  ton  of  ore  mined. 

In  the  1916  cost  of  mining  as  it  appears  in  the  above  cost  tabulation: 

Per  ton  ore 

For  driving  of  drifts,  main  raises  and  haulage  ways,  there  is  charged $0 . 20 

For  undercutting  and  caving,  drawing,  loading,  hauling,  hoisting,  etc.,  to- 
gether with  a  proper  proportion  of  all  general  charges,  the  cost  was 0 . 406 


However,  the  actual  cost  during  the  period  for  driving  drifts,  main  raises  and    $0. 606 
ways,  amounted  to  10  cents  per  ton.     That  is  to  say,  the  actual  cash  ex- 
penditure per  ton  for  mining  in  1916  was  $0.506. 

The  copper  in  the  ore  occurs  mainly  in  combination  with  sulphur,  but  par- 
tially in  oxide  combinations.  The  first  is  readily  separated  from  the  waste  rock 
in  which  it  occurs  by  either  flotation  or  gravity  concentration.  The  oxides, 
however,  give  but  poor  recoveries  by  either  means.  The  ore  milled  in  1916  ran 
1.548  per  cent.  Cu  and  the  recoveries  were  as  follows: 


Assay  of  ore 

Percentage 
saved  in  milling 

Copper  in  sulphide  form 

1  213 

90  95 

Copper  in  oxide  combinations  

0  335 

16.60 

Total  copper  in  ore  

1.548 

74.86 

As  against  the  mill  record  for  the  latter  half  of  1915,  the  above  record  shows 
some  improvement  in  the  recovery  of  sulphide  copper,  but  a  lower  total  recovery 
due  to  an  increased  proportion  of  oxide  copper  in  the  ore. 

The  last  six  sections  of  the  present  mill  were  not  quite  completed  at  the  be- 
ginning of  1916,  but  went  into  commission  as  follows: 

Section  No.  13  on  January  6th,  1916 
Section  No.  14  on  January  9th 
Section  No.  15  on  January  21st 
Section  No.  16  on  January  24th 
Section  No.  17  on  February  1st 
Section  No.  18  on  February  21st 

Due  to  this  and  the  further  fact  that  the  grinding  capacity  of  the  mills  gradu- 
ally increased  throughout  the  year,  the  two  half  year's  work  compare  as  follows : 

The  average  daily  tonnage  milled  during  the  first  half  year  was 13,466  tons 

The  average  daily  tonnage  milled  during  the  second  half  year  was 16,203  tons 


The  average  daily  tonnage  milled  during  the  past  month,  February,  1917, 

was 17,013  tons 

The  production  of  copper  for  the  first  half  year  of  1916  was 53,962,136  Ibs. 

The  production  of  copper  for  the  second  half  year  of  1916  was 66,810,501  Ibs. 


120,772,637  Ibs. 


310  THE  COST  OF  MINING 

During  the  year  two  additional  sections  of  the  mill  have  been  under  construc- 
tion and  should  start  within  the  next  two  months,  adding  about  11  per  cent,  to 
the  present  capacity. 

Attached  here  to,  you  will  find  details  of  the  concentrating  operations  for  the 
year. 

Respectfully, 

C.  E.  MILLS, 

General  Manager. 

INSPIRATION  CONSOLIDATED  COPPER  COMPANY 
Mill  Statistics— Year  1916 

Dry  tons  milled 5,316,350. 1 

Tons  per  day 14,850 . 1 

Average  number  of  sections  running 16.  54 

Average  tonnage  rate  per  section 897 . 8 

Assay  mill  feed — per  cent,  copper 1 .  548 

Screen  analysis  of  feed  (on  48  mesh) 3.3 

Per  cent,  copper  in  feed — oxidized 0. 335 

Assay  of  general  tailings — per  cent,  copper 0. 397 

Per  cent,  copper  in  general  tailings — oxidized 0 . 283 

Per  cent,  copper  in  general  concentrates — smelter  assay 30.  688 

Per  cent,  copper  in  flotation  concentrates 37 .  50 

Per  cent,  copper  in  table  concentrates 11 .  23 

Per  cent,  moisture  in  general  concentrates 17.  27 

Tons  concentrates  produced  per  ton  of  ore 0 . 377 

Recovery  of  copper  calculated  from:  (Smelter  Assays) 

Assays    only 75.33 

Assays  and  weights  of  concentrates  and  feed 74 . 86 

Assays  and  weights  of  concentrates  and  tails 75. 18 

Assays  and  weights  of  feed  and  tails 75 .  29 

Recovery  of  copper  sulphides 90 .  95 

Water  used  per  ton  ore — total  gallon  (February, 

1917,  figures) '. 1108.0 

Water  used  per  ton  ore — 

Reclaimed  in  tanks  at  foot  of  Mill 354 

Reclaimed  from  ponds 528 

New  water  from  Kiser  Pump  Station 226 

Steel  ball  consumption  per  ton  of  ore  milled 1 . 76 

Flotation  oil  consumption  per  ton  of  ore  milled  (pounds) 1 . 287 

Coal  tar 1.20 

Other  oils..  .   0.087 


CHAPTER  XVII 

THE  NORTHWESTERN  COPPER  FIELD 

CLIMATE  AND  GEOGRAPHY  OF  THE  NORTH  WESTERN  COAST — INLETS  AND  GLACIATION — 
ECONOMIC   ADVANTAGES — PROBABILITY  OF  FURTHER  MINING  DEVELOPMENTS — 

BUTTE ITS   COMPARISON  WITH  THE   PORPHYRY  MINES — ANACONDA  COSTS   IN 

1915 — BUTTE  IN  1908 — GRANBY  CONSOLIDATED  IN  1908 — HIDDEN  CREEK. 

In  the  region  along  the  northwestern  border  of  North  America,  ex- 
tending from  Butte,  Montana  to  south-central  Alaska,  there  is  made  at 
present  an  annual  output  of  copper  of  about  500,000,000  pounds,  or  more 
than  twice  that  of  the  Lake  Superior  region.  In  this  territory  by  far 
the  most  productive  district  is  that  of  Butte,  which  is  now  fully  developed 
and  is  not  likely  to  add  further  to  its  production.  At  the  other  extremity 
of  the  field  the  Kennecott  Copper  mine,  which  has  been  an  extraordinary 
bonanza,  seems  also  to  have  reached  or  passed  its  zenith.  But  in  so 
large  a  tract  it  is  reasonable  to  expect  that  the  output  mentioned  will  be 
maintained  or  increased. 

In  climate  and  appearance  this  region  is  in  marked  contrast  to  the 
southwestern  copper  fields.  The  one  marked  feature  is  the  presence  of  a 
coast  range  or  ranges  along  the  border  of  the  Pacific.  The  central  portion 
of  these  ranges  has  within  recent  geological  times  been  depressed  so  that 
the  mountains,  valleys  and  canyons  are  now  partially  flooded  by  the  sea. 
This  is  the  case  all  the  way  from  Puget  Sound  as  far  north  as  Skagway, 
Alaska,  a  distance  of  nearly  1000  miles.  Thus  the  whole  coast  has  been 
made  exceedingly  picturesque.  While  the  scenery  of  this  region,  of 
course,  is  generally  known,  the  actual  facts  concerning  it  are  not  perhaps 
fully  realized.  For  instance  at  the  Portland  canal,  which  forms  for  some 
distance  the  boundary  between  southeast  Alaska  and  British  Columbia, 
the  canyon,  which  is  flooded  by  the  ocean,  has  the  scale  of  the  Grand 
Canyon  of  Arizona.  Within  three  miles  of  the  shores  of  this  narrow 
inlet  glacier-covered  mountains  rise  to  heights  of  over  5000  feet.  The 
water,  which  is  not  more  than  two  or  three  miles  wide,  is  over  1000  feet 
deep,  so  that  the  scenery  while  very  different  from  that  of  the  Grand 
Canyon  is  at  least  as  imposing.  In  many  other  places  equally  striking 
scenes  may  be  found.  But  while  the  coast  ranges  are  partially  flooded 
they  are  everywhere  high  enough  to  catch  a  great  deal  of  the  moisture 
of  the  Pacific,  so  that  inland  at  distances  not  more  than  50  to  100  miles 
from  the  coast  there  is  a  semi-arid  belt  which  extends  continuously  down- 
ward through  the  plateau  regions  well  into  Mexico.  Butte  is  in  this 
semi-arid  belt.  There  are  places  in  British  Columbia  where  the  rainfall 

311 


312  THE  COST  OF  MINING 

is  only  8  to  10  inches  a  year.  But  the  effect  of  this  slight  precipitation  is 
very  different  from  that  found  farther  south.  In  the  winter  the  propor- 
tion of  cloudy  weather  is  very  much  greater  and  all  the  hillsides  are 
covered  with  growths  of  pine  and  other  evergreens.  It  is  only  the  level 
plains  that  remain  unforested.  While  the  winters  cannot  be  said  to  be 
very  severe  as  compared  with  those  of  the  northeast  part  of  the  country 
there  is  still  a  good  deal  of  snow  and  many  weeks  of  sharp  frost. 

To  return  to  the  coast  ranges,  we  may  say  that  they  are  the  most 
conspicuous  feature  of  the  geography  of  the  region,  for  their  presence 
gives  rise  to  the  semi-ardidity  of  the  continental  belt  just  east  of  them, 
and  they  also  present  in  themselves  interesting  climatic,  geographical 
and  geological  features.  The  mountain  summits  of  the  coast  ranges 
are  frequently  islands  or  peninsulas.  The  Olympic  mountains  west  of 
Puget  Sound  are  about  9000  feet  high  and  covered  with  glaciers.  The 
northern  extremity  of  the  Cascade  mountains  just  east  of  Puget  sound  is 
a  ridge  about  6,000  feet  above  the  sea,  but  on  its  summit  are  a  number  of 
lofty  volcanoes,  such  as  Mt.  Helens,  Mt.  Adams,  Mt.  Rainier  and  Mt. 
Baker,  rising  to  heights  of  from  10,500  to  14,500  ft.,  all  covered  with  snow 
and  ice.  This  range  seems  to  come  to  an  end  just  north  of  the  inter- 
national boundary  line,  south  of  the  Frazier  River;  but  only  a  few  miles 
toward  the  northwest  the  coast  range  of  British  Columbia  begins  and 
even  within  a  few  miles  of  Vancouver  it  shows  an  altitude  of  4000  feet 
or  more  and  still  farther  northwest  reaches  heights  of  11,000  to  12,000 
feet.  At  such  heights,  of  course,  it  is  universally  covered  with  snow  and 
has  been  glaciated  for  long  periods  so  that  in  some  places  the  range  con- 
sists of  a  series  of  spiral  shaped  peaks  like  the  Matterhorn,  rising  through 
the  snow  fields.  At  one  place  I  have  counted  over  thirty  of  such  peaks. 
Vancouver  Island  is  separated  from  the  Olympic  peninsula  by  a  narrow 
strait.  It  consists  of  a  mountain  ridge  some  350  miles  long  with  more  or 
less  gentle  slopes  toward  the  north  east.  The  continuation  of  this  chain 
toward  the  northwest,  or  at  least  similar  groups  of  mountains,  form  the 
numerous  large  islands  of  the  coast  of  British  Columbia  and  southeast 
Alaska. 

There  are  abrupt  changes  in  the  rainfall  on  the  different  sides  of  these 
islands  or  mountains.  The  westward  or  windward  side  is  exceedingly 
rainy,  in  some  places  rising  to  140  inches.  On  the  eastward  side  it  may 
be  only  20  or  30  inches.  Thus  on  Vancouver  Island  the  City  of  Victoria 
at  the  southeast  extremity  has  an  average  rainfall  of  only  31  inches,  and 
Seattle  on  Puget  Sound  only  37  inches,  but  during  the  winter  there  is  a 
great  deal  of  cloudy  weather  in  both  places.  Instead  of  heavy  rains 
there  are  long  continued  drizzles  which  give  the  visitor  the  impression  of 
much  rain,  although  as  a  matter  of  fact  the  precipitation  of  either  of 
these  places  mentioned  is  a  good  deal  less  than  that  of  New  York  or 
Boston. 


THE  NORTHWESTERN  COPPER  FIELD  313 

But  the  rainfall  for  a  considerable  distance  from  the  coast  is  heavy 
enough  to  produce  a  heavy  forest  growth.  The  Douglas  Fir,  otherwise 
known  as  the  Oregon  Pine,  forms  an  immense  forest  on  Vancouver 
Island  but  farther  northward  this  tree  no  longer  appears,  its  place  being 
taken  by  heavy  growths  of  cedar  and  spruce.  The  long  periods  of  damp 
cloudy  weather  seem  to  be  favorable  to  numerous  fernlike  plants  such  as 
one  finds  in  the  rainy  regions  of  the  tropics. 

The  coast  ranges  seem  to  have  been  uplifted  slowly  across  the  courses 
of  rivers  which  take  their  rise  in  the  interior.  These  streams  were  able 
during  the  uplift  of  the  mountains  to  continue  to  cut  their  way  through, 
thus  producing  the  canyons  referred  to,  which  have  become  inlets  that 
extend  back  in  many  cases  more  than  100  miles.  During  the  glacial 
period  the  whole  country  was  covered  with  ice  and  each  of  the  inlets  was 
occupied  by  such  portions  of  the  general  glacier  that  flowed  faster  than 
the  rest  so  that  at  present  their  walls  are  thoroughly  smoothed  and 
polished. 

The  visitor  from  other  regions  is  astonished  to  see  the  swamp  growth 
climbing  up  the  sides  of  some  of  these  steep  mountains.  In  some  places 
formations  of  peat  are  found  actually  on  crags  difficult  to  climb.  Of 
course  in  most  regions  a  peat  swamp  is  only  found  in  a  dead  level. 

It  is  hardly  necessary  to  say  that  the  invasion  of  the  sea  among  the 
coast  ranges  is  an  important  economic  feature.  The  coast  is  a  succession 
of  deep  harbors  some  of  which  actually  traverse  the  mountains  to  the 
comparative  level  country  further  inland.  The  abundance  of  timber  and 
the  cheap  water  transportation  are  important  to  the  mining  business,  or 
any  other  business  for  that  matter.  A  number  of  considerable  cities 
have  already  grown  up  on  these  inlets,  supported  by  trade  that  extends 
to  all  parts  of  the  world.  Of  these  the  most  southerly  is  Portland  on  the 
Columbia  river,  the  most  southerly  of  many  rivers  that  cut  through 
ranges.  On  Puget  sound  and  its  northerly  continuation  the  strait  of 
Georgia,  are  the  large  towns  of  Tacoma,  Seattle  Victoria  and  Vancouver. 
Still  farther  north  is  Prince  Rupert  where  the  Canadian  Grand  Trunk 
Pacific  has  built  its  terminal  after  passing  through  the  mountains  along 
the  Skeena  river. 

In  various  portions  of  this  territory  or  contiguous  to  it  there  are 
numerous  coal  fields,  the  largest  of  which  is  in  southeast  British  Columbia 
facing  the  great  plains.  In  this  region  is  the  Crow's  Nest  Pass  coal 
district,  which  produces  an  excellent  coking  coal;  but  coke  is  also  made 
in  a  rather  small  field  of  Cretaceous  age  on  Vancouver  Island.  A  great 
deal  of  coal,  mostly  of  rather  inferior  quality  also  occurs  in  Montana. 
An  extensive  coal  field  of  Tertiary  age  occurs  in  the  basin  of  Puget  Sound. 
In  Alaska  there  are  also  coal  fields  which  have  been  much  advertised 
in  the  newspapers  chiefly  as  subjects  of  controversy,  but  which  are  not  at 
present  of  great  commercial  importance.  I  recite  these  facts  as  a  basis 


314  THE  COST  OF  MINING 

for  the  expectation  that  the  industries  of  this  region  will  be  found  capable 
of  great  development.  Along  a  great  part  of  the  coast  region  it  is  no 
exaggeration  to  say  that  the  factors  making  for  cheap  mining  are  alto- 
gether exceptional.  This  is  an  argument  for  supposing  that  it  will  be 
found  possible  to  work  ore  deposits  that  might,  in  less  favored  places, 
prove  unpayable. 

The  geological  features  of  the  coast  ranges  are  such  as  to  give  rise  to 
the  expectation  of  finding  considerable  and  persistent  mineralization. 
An  immense  granite  batholith  of  moderate  geological  age  forms  the  core 
of  the  mountains  and  around  the  edges  of  this  many  deposits  of  sulphide 
ore  have  been  found.  In  the  coast  range  proper  only  two  of  these  have 
been  developed  as  yet  into  important  copper  mines,  namely  the  Hidden 
Creek  property  at  Anyox,  British  Columbia,  and  the  Britannia  mine  near 
Vancouver,  but  many  others  are  known,  such  as  the  gold  of  Douglas 
Island,  Alaska,  a  copper  district  on  the  White  Horse  river  and  many  similar 
mines  and  prospects.  Two  features  which  should  be  specified  that  bear 
on  the  possibility  of  other  mines  being  opened  up :  first  the  heavy  forest 
growths  and  the  boggy  nature  of  the  soil  effectively  conceal  the  rocks 
over  large  tracts,  and  second,  the  heavy  glaciation  has  swept  off  such 
portions  of  the  orebodies  as  may  previously  have  been  oxidized  with  the 
accompanying  secondary  enrichment,  so  that  the  miner  is  compelled  to 
face  at  once  the  problem  of  working  the  unaltered  sulphides.  To  start 
successfully  under  these  conditions  is  usually  a  matter  requiring  consider- 
able capital.  It  is,  therefore,  no  poor  man's  mining  country.  But  I 
have  a  strong  impression  that  the  development  of  the  flotation  process 
and  the  use  of  considerable  capital  will  make  commercially  available  ore 
that  will  average  only  1  or  2  per  cent,  copper  and  of  such  a  considerable 
amount  apparently  may  be  found. 

To  one  accustomed  to  living  in  Butte,  Montana,  these  general  des- 
criptions of  the  coast  ranges  and  the  geography  of  the  northwest  may 
seem  rather  a  far  cry,  for  that  locality  shows  only  a  meager  resemblance 
to  the  coast  country  itself.  However,  quite  close  to  Butte,  in  the  Coeur 
d'Alene  mountains,  the  features  of  the  country  are  not  far  from  those  I 
have  just  described.  Butte  itself  is  in  most  respects  more  similar  to  the 
general  plateau  regions  of  the  Rocky  mountain  system.  It  is  surrounded 
by  grassy  plains  broken  by  numerous  hills  and  mountain  ridges  forested 
with  pines.  It  is,  however,  separated  from  other  copper  producing  dis- 
tricts to  the  southward  by  a  gap  of  many  hundred  miles  and  its  ore 
deposits  belong  to  the  mountain-building  period  which  occurred  at  the 
close  of  Mesozoic  times.  The  Butte  batholith  is  merely  a  portion  of  a 
series  of  great  intrusions  that  are  found  here  and  there  over  a  large  area 
of  Montana  and  Idaho  cutting  through  sediments  of  upper  Cretaceous  age. 
I  have  no  reason  to  assert  that  the  coast  ranges  of  British  Columbia  are 
of  the  same  age,  but  it  is  not  improbable.  I  am  sure  they  cut  through 


THE  NORTHWESTERN  COPPER  FIELD  315 

rocks  at  least  as  young  as  the  lower  Cretaceous.  Thus  in  a  general  way 
it  seems  as  if  the  principal  deposits  of  Montana,  Idaho  and  British  Col- 
umbia do  belong  to  the  same  geological  province. 

The  Butte,  or  Boulder  batholith  is  exposed  over  an  area  of  over  2000 
square  miles.  Around  its  border  are  minor  mineral  districts,  but  the 
principal  one,  Butte  itself,  is  in  the  south  central  portion  of  it.  This 
great  intrusion  has  been  abundantly  described  not  only  by  the  United 
States  Geological  Survey,  but  by  many  private  writers,  particularly 
H.  V.  Winchell,  Reno  H.  Sales  and  other  geologists  employed  by  the 
Anaconda  Copper  Company.  It  appears  that  the  mineralization  took 
place  in  the  hardened  crust  of  the  batholith,  probably  before  the  deeper 
seated  portion  had  become  thoroughly  solidified.  Some  quartz  porphyry 
dikes  within  the  district  are  thought  to  be  the  upward  prongs  of  a  re- 
newed intrusion  within  the  body  of  the  main  one.  However  this  may  be, 
it  is  certain  that  the  orebodies  were  formed  before  the  mass  had  reached 
the  stage  of  quiescence  because  the  mineralized  waters  followed  at 
different  periods  fissures  that  were  formed  after  a  portion  of  the  minerali- 
zation had  been  accomplished.  Thus  the  veins  cross  and  fault  each 
other  in  a  most  intricate  way,  the  details  of  which  have  never  been  fully 
published.  The  area  of  the  Butte  district  is  small,  covering  perhaps 
1500  acres.  From  it  have  been  obtained  some  3,500,000  tons  of  metallic 
copper  and  the  end  is  not  by  any  means  in  sight.  It  is  interesting  to 
compare  for  a  moment  the  volume  of  such  copper  with  that  obtained 
from  that  of  some  of  the  disseminated  deposits  further  south.  The  area 
covered  by  the  Utah  Copper  Mine  is  only  a  little  over  200  hundred  acres, 
yet  it  is  known  to  contain  as  much  as  has  been  produced  by  the  entire 
Butte  district.  A  similar  comparison  might  be  made  with  almost  any 
other  of  the  other  large  porphyry  deposits.  Thus  it  appears  that  even 
with  respect  to  superficial  area  the  mineralization  of  Butte  is  not  so 
concentrated  as  that  of  the  porphyry  districts;  but  when  we  consider  in 
addition  that  the  ores  are  spread  over  a  vertical  range  of  more  than  3000 
feet  as  compared  with  only  a  few  hundred  feet  in  the  case  of  the  porphyries 
the  comparative  sparseness  of  the  minerals  becomes  much  more  evident 
still.  If  we  may  suppose  that  Butte  is  worked  out  to  an  average  depth 
of  2000  feet  over  an  area  of  1500  acres  we  find  that  its  product  of  copper 
is  only  about  6  tenths  of  a  pound  of  copper  per  ton  of  rock  in  the  inclosed 
volume,  as  against  a  yield  of  15  to  30  pounds  per  ton  in  the  case  of  the 
porphyry  mines.  It  seems  as  if  nothing  could  show  more  clearly  the 
difference  in  the  problem  of  mining. 

A  territory  so  poor  by  comparison  en  masse  is  made  commercially 
valuable  only  by  the  concentration  of  the  copper  in  veins  or  limited  areas. 
Since  not  all  of  the  rock  can  be  taken  out,  it  follows  that  the  richer 
portions,  which  after  all  are  only  a  minute  portion  of  the  whole,  say  1 
per  cent.,  must  be  searched  for  by  means  of  expensive  underground  de- 


316  THE  COST  OF  MINING 

velopment  work.  A  person  does  not  have  to  be  an  expert  in  mining  to 
recognize  such  a  difference.  In  dollars  and  cents  it  is  represented  by  the 
cost  for  mining  which  is  $1  per  ton,  and  in  some  places  a  good  deal  less, 
among  the  porphyry  mines  of  the  south,  as  against  about  $3. 50  in  the  Butte 
district  under  pre-war  conditions,  and  something  like  $6  per  ton  in  1918. 

It  has  been  thought  that  there  must  be  something  wrong  with  the 
mining  practice  of  the  Butte  district  to  make  the  cost  of  mining  so  high. 
The  answer  to  this  is  that  many  able  engineers  and  managers  have  tried 
to  reduce  it  but  have  universally  failed.  Some  twenty  years  ago,  in  the 
late  90's,  when  the  wages  were  lower  and  general  operative  conditions  much 
better  than  they  have  been  since,  a  portion  of  the  mines  of  Butte,  namely 
those  of  the  Boston  and  Montana  Company  were  able  to  mine  their 
ores  for  about  $2.65  a  ton,  but  this  was  not  maintained,  and  I  suppose  no 
mine  in  the  district  has,  of  late  years,  even  before  the  war,  been  able  to 
cover  all  its  expenses  at  less  than  $3  per  ton. 

The  expectation  that  cheaper  work  could  be  done  arose  in  all  proba- 
bility from  a  misconception  of  the  facts.  There  is  always  in  such  a 
district  as  Butte  some  large  deposits  that  are  described  first,  conveying 
an  impression  that  they  represent  the  ore  bodies  as  a  whole.  I  remember 
nearly  thirty  years  ago  of  reading  in  newspapers  a  description  of  the 
Anaconda  vein  at  Butte,  which  said  that  the  ore  was  more  than  20  square 
sets  wide,  more  than  120  feet,  and  very  rich,  etc,  etc.  Now  unquestion- 
ably such  stopes  existed,  very  likely  they  are  to  be  found  today,  but  so 
far  from  representing  the  whole  bodies  of  the  district  they  do  not  even 
represent  a  single  vein.  Such  places  are  merely  swells  or  local  enrich- 
ments. The  fact  is  that  most  of  the  ore  comes  from  rather  narrow  streaks 
frequently  occurring  between  walls  of  soft,  partially  decomposed  granite. 
The  enrichments  or  ore-shoots  frequently  come  to  an  abrupt  end,  either 
upward  on  account  of  the  leaching  from  the  surface,  or  in  any  direction 
from  original  limitations  of  the  mineralizations,  very  frequently  by  fault- 
ing. Not  only  the  orebodies  but  actually  the  largest  veins  progressively 
change  their  appearance  and  even  their  structure  from  level  to  level. 
These  changes  are  not  revolutionary  or  very  great  in  a  distance  of  a 
hundred  feet,  but  in  a  vertical  range  of  one  or  two  thousand  feet  the 
changes  are  so  great  that  one  acquainted  with  the  orebodies  at  the  top 
if  shown  those  at  the  bottom  without  tracing  them  through  would  find 
nothing  to  induce  him  to  believe  that  they  were  related  in  any  way. 

In  short,  the  cost  of  mining  in  Butte  is  necessarily  so  high  it  must  be 
looked  at  as  the  principal  factor  which  will  limit  the  production  of  that 
district. 

THE  ANACONDA  COPPER  MINING  Co. 

This  introduction  will  serve  to  explain  many  features  in  the  history 
of  the  Anaconda  Co.  which  has  now  become,  not  only  a  mining  concern, 


THE  NORTHWESTERN  COPPER  FIELD  317 

but  an  important  financial  organization  doing  a  general  business  in  mining 
smelting,  refining,  marketing  and  manufacturing;  its  products  include 
not  only  copper,  but  also  lead,  zinc,  silver,  gold  and  other  metals.  In 
the  ten  years  since  the  first  edition  of  this  book  was  published,  changes 
in  this  direction,  by  consolidation,  purchase  and  expansion  have  been 
going  on  practically  all  the  time,  until  it  is  scarcely  an  exaggeration  to 
say  this  concern  does  practically  all  of  the  copper  mining  at  Butte.  It 
is  scarcely  worth  while  to  specify  the  dates  at  which  all  the  changes  have 
taken  place,  but  roughly,  the  Anaconda  which  was  long  the  principal 
copper  mine  of  the  district  but  which  had  at  later  times  many  important 
rivals,  has  been  made  to  absorb  nearly  all  the  others  and  finally  the 
holding  company  to  which  it  itself  belonged — the  Amalgamated  Copper 
Co.  During  the  past  ten  years  the  Butte  Coalition  Mining  Company, 
the  copper  mines  formerly  owned  by  Senator  W.  A.  Clark,  the  Parrott 
Mine,  the  Boston  and  Montana  and  the  Butte  and  Boston  have  all  been 
consolidated,  principally,  by  interchange  of  stock.  The  International 
Smelting  Company  and  The  United  Metals  Selling  Company,  which  owned 
a  lively  refining  business  on  the  Atlantic  Coast  have  also  been  merged. 
A  considerable  interest  has  been  obtained  in  the  Inspiration  Copper 
Company  of  Arizona.  Many  isolated  claims  have  been  purchased  and 
large  properties  bought  for  development  in  South  America.  Great 
investments  have  been  made  in  improving  smelting  plants  in  Montana 
and  development  of  a  process  and  plant  for  the  production  of  electrolytic 
zinc. 

A  careful  study  of  the  annual  reports  makes  it  plain  that  these  changes 
were  more  or  less  necessary  to  prolong  the  life  and  maintain  the  earning 
power  of  the  Company.  In  other  pages  it  is  shown  that  for  many  years 
it  has  been  a  struggle  to  maintain  an  output  of  ores  of  high  enough  grade 
to  permit  the  extraction  of  copper  at  a  reasonable  cost.  It  was  stated 
in  the  first  edition  that  if  the  increase  of  costs,  which  had  been  showing 
itself  for  a  number  of  years  in  the  mines  of  the  old  Anaconda  Company, 
were  to  continue  for  another  ten  years  that  those  properties  would  no 
longer  be  profitable.  The  ten  years  have  passed,  but  the  prediction  has 
not  come  true,  the  reason  being  that  the  efforts  of  the  management  have 
prevented  it.  One  may  discern  these  efforts  in  every  direction;  in  the 
improvements  in  the  mines  by  way  of  better  ventilation,  the  concentra- 
tion of  pumping  and  hoisting  operations  to  as  few  points  as  possible,  and 
the  reduction  of  power  costs.  In  the  smelting  works  there  have  been 
similar  changes,  designed  principally  to  increase  the  extraction  of  copper 
from  the  ores  and  also  to  reduce  the  cost  of  transportation,  and,  very 
likely,  of  operating  also.  For  many  years  the  Company  operated  two 
large  plants,  one  at  Anaconda,  at  a  distance  of  only  26  miles  and  con- 
nected with  the  mines  by  a  railroad  owned  by  the  Company,  and  the 
other  at  Great  Falls,  at  a  distance  of  160  miles  to  which  the  ore  had  to  be 


318  THE  COST  OF  MINING 

transported  over  the  Great  Northern  Railroad  at  a  cost  of  $1.00  per  ton. 
By  the  enlargement  of  the  Anaconda  plant  it  has  been  made  possible  to 
treat  all  the  copper  ores  there  and  thus  save  the  excessive  transportation 
from  Butte  to  Great  Falls.  Probably  the  principal  agency  for  increasing 
the  yield  of  copper  has  been  the  introduction  of  the  flotation  process  of 
concentration. 

By  these  efforts  the  yield  of  copper  per  ton  has  been  maintained 
fairly  well  against  the  undoubted  decline  in  the  average  value  of  the  ores. 
Indeed,  in  the  year  1917  and  1918  there  was  an  increase  in  the  yield  of 
copper  compared  with  1915,  of  about  10  per  cent.,  but  is  a  reasonable 
supposition  that  a  portion  of  this  increase  was  due  to  war  conditions. 
The  company  no  doubt  tried  to  keep  up  its  output  by  mining  its  best  ores. 
There  was,  as  in  other  places,  a  considerable  shortage  and  deterioration 
of  labor.  It  is  plain  that  the  sole  result  of  these  efforts  has  been  to  arrest 
the  decline  in  yield  and  the  increase  of  cost.  During  the  past  few  years 
the  multiplicity  of  the  activities  of  this  concern  have  made  it  almost 
impossible  to  figure  out  the  cost  of  individual  operations.  Mining  and 
developments  at  Butte  are  confused  with  developments  in  South  America; 
the  smelting  operations  at  Anaconda  and  Great  Falls  are  confused  in  the 
statements  with  similar  operations  on  zinc  ores  at  Great  Falls  and  with 
the  various  smelting  operations  of  the  International  Smelting  Company 
in  Utah  and  Arizona.  About  the  last  year  for  which  I  can  obtain  a 
reasonably  correct  statement  of  the  cost  of  operations  at  Butte  was  1915. 
In  that  year  the  costs  were  as  follows: 

Mining 4,383,340  tons  $17,254,622  -  $3.93 

Transportation 4,383,340  tons      1,029,670  -       .24 

Reduction 4,805,694  tons    10,694,032=    2.44 

Freight,  refining  and  selling 4,492,171    =        .94 

Administration,  taxes,  etc 573,545   =       .12 


Total  cost  per  ton $7. 67 

Yield  Copper  55.2  j Equal  to  about  66  Ibs.  Cu.  Cost 

Silver  1 . 9  oz.       J  11 . 8  cents  per  pound. 

Gold  50  cents 

If  these  costs  were  representative  one  is  justified  in  stating  that  copper 
produced  at  Butte  is  hardly  as  cheap  as  the  average.  If  under  pre-war 
conditions  it  cost  so  close  to  12  cents  a  pound  under  the  present  it  can 
hardly  fall  under  18  cents. 

Butte  (in  1908). — The  labor  employed  in  the  Butte  mines  is  vigorous, 
intelligent,  and,  under  normal  conditions,  abundant;  but  on  the  other 
hand,  the  wages  are  the  highest  paid  in  the  United  States,  if  not  in  the 
world,  for  any  considerable  volume  of  labor.  Up  to  1901  the  average 
wages  paid  were  37  cents  an  hour.  Since  1901  they  have  averaged  47 
cents  an  hour,  these  figures  being  compared  with  25  cents  an  hour  for 
Lake  Superior  It  is  indeed  probable  that  the  Butte  miners  are  better 


THE  NORTHWESTERN  COPPER  FIELD  319 

and  more  effective  than  those  of  Lake  Superior,  but  hardly  to  the  extent 
required  to  make  up  this  great  difference.  Under  present  conditions, 
wages  in  Butte  are  nearly  100  per  cent,  higher  than  in  Lake  Superior. 
It  seems  unreasonable  to  estimate  that  more  than  half  of  this  difference 
can  be  made  up  by  superior  efficiency  in  Butte,  so  that  in  round  numbers 
we  shall  have  to  estimate  labor  costs  in  Butte  as  at  least  50  per  cent, 
higher  than  in  Lake  Superior. 

One  unfavorable  factor  which  may  be  classed  as  external  is  the  loca- 
tion of  claims  under  the  apex  law.  This  has  meant  the  parceling  out 
of  the  surface  in  small,  irregular,  and  conflicting  fragments,  and  this  fact 
has  interposed  a  serious  obstacle  to  the  comprehensive  development 
and  working  of  the  mines.  In  this  respect  Butte  does  not  perhaps 
suffer  by  comparison  with  other  mining  districts  in  the  Rocky  Mountain 
region;  but  as  compared  with  Lake  Superior  this  feature  must  be  classed 
as  a  pronounced  disadvantage. 

Internal  Factors. — The  internal  factors  of  the  Butte  mines  are  not 
unfavorable  for  fissure  vein  deposits,  but  they  present  certain  character- 
istics which  make  for  increased  costs  as  compared  with  Lake  Superior. 
The  ores  all  come  from  an  area  of  about  two  square  miles,  and  from  this 
area  the  output  of  copper  and  silver  has  been  simply  prodigious.  This 
is  a  favorable  feature. 

The  veins,  according  to  H.  V.  Winchell,  belong  to  three  different 
systems.  Of  these  the  first  and  oldest,  called  the  Anaconda  system, 
strikes  east  and  west  and  dips  to  the  south.  The  filling  of  these  veins 
is  quartz  and  pyrites  in  which  the  original  proportion  of  copper  was 
probably  small.  These  veins  are  intersected  by  mineralized  fault 
fissures  striking  northeast  and  southwest,  and  both  these  systems  are 
intersected  and  faulted  by  a  third  system  of  mineralized  fissures  running 
northwest  and  southeast.  In  addition  to  these  veins,  still  later  barren 
faults  of  considerable  displacement  intersect  all  the  orebodies. 

The  result  is  a  great  complexity  of  vein  structure  which  has  proved 
a  serious  problem  to  unravel.  As  might  be  expected  the  various  faults 
are  accompanied  by  considerable  zones  of  crushing  and  alteration  which 
add  materially  to  the  difficulty  of  mining.  An  additional  complexity 
is  brought  in  by  the  influence  of  a  pronounced  reconcentration  of  values 
due  to  surface  oxidation  and  leaching  and  subsequent  deposition  at 
greater  depths.  While  it  is  true  that  in  a  great  measure  the  orebodies 
owe  their  commercial  value  to  this  reconcentration,  it  is  also  true  that 
it  has  resulted  in  an  uneven  distribution  of  the  ore  which  imposes  a 
necessity  for  sorting  and  is  a  factor  of  additional  cost.  The  upper 
200  or  300  ft.  of  the  veins  is  absolutely  barren. 

The  oxidation  of  the  large  bodies  of  pyrites  and  the  decomposition  of 
vast  quantities  of  timber  in  these  mines  has  resulted  in  the  generation 
of  an  unpleasant  degree  of  heat.  The  temperature  must  be  kept  down 


320  THE  COST  OF  MINING 

by  very  thorough  ventilation.  Here  we  have  a  factor  that  makes  for 
additional  cost. 

Method  of  Treatment. — The  process  of  reduction  in  Butte  is  conducted 
about  as  follows:  The  ore  is  hoisted  from  the  mine  and  dumped  directly 
into  large  bins  from  which  it  is  drawn  into  railroad  cars  and  transported 
to  combined  concentrating  and  smelting  plants.  A  small  proportion 
goes  to  plants  in  the  vicinity  of  Butte  itself,  and  not  more  than  two  or 
three  miles  from  the  mines,  but  by  far  the  greater  portion  is  taken  to 
Anaconda  26  miles  away,  or  to  Great  Falls  100  miles  away.  At  the 
smelter  all  ores  containing  less  than  6  per  cent,  copper  are  concentrated. 
The  higher-grade  ores  are  smelted  in  blast  furnaces  and  the  concentrates 
in  reverberatory  furnaces  collecting  the  metals  into  a  matte  which  is 
bessemerized  on  the  ground  into  blister  copper.  A  portion  of  this  blister 
copper  is  refined  at  the  Great  Falls  plant,  but  by  far  the  greater  portion 
is  shipped  to  the  Atlantic  seaboard  in  the  neighborhood  of  New  York 
and  there  refined.  Nearly  all  the  copper  output  of  Butte  is  sold  through 
the  agency  of  the  United  Metals  Selling  Company. 

The  most  pronounced  factor  making  for  high  costs  in  the  Butte 
ores  is  the  large  percentage  that  must  be  smelted.  This  can  be  estimated 
roughly  at  40  per  cent,  as  against  4  per  cent,  for  the  richest  copper  ores 
in  Lake  Superior. 

The  concentrating  and  smelting  are  largely  done  in  two  immense 
plants  owned  by  the  Amalgamated  Copper  Company,  one  at  Anaconda, 
and  the  other  at  Great  Falls.  It  is  believed  that  these  plants  are  equipped 
and  operated  as  well  as  any  in  the  world,  no  pains  having  been  spared  in 
capital  expenditure  to  secure  the  greatest  economy.  But  it  is  mani- 
festly a  physical  impossibility  to  smelt  15  to  30  tons  of  ore  at  Butte  for 
anything  like  the  cost  required  to  smelt  one  ton  of  concentrates  in  Lake 
Superior.  Furthermore,  the  Butte  copper  must  stand  not  only  a  very 
heavy  transportation  expense  to  the  seaboard,  but  must  further  undergo 
the  expensive  process  of  electrolytic  refining.  The  logical  result  of 
these  conditions  is  that  in  Butte  $4  a  ton  for  concentrating,  smelting, 
and  refining  may  be  considered  as  an  absolute  minimum  as  against  a 
cost  of  from  60  cents  to  $1  in  Lake  Superior. 

Mining  in  the  Butte  District. — It  is  not  my  intention  to  go  into 
the  details  of  mining  practice  further  than  to  point  out  the  general  char- 
acteristics that  determine  the  costs,  but  it  may  be  pertinent  to  mention  in 
a  general  way  the  methods  in  use  underground.  The  Butte  ore  is  all 
opened  by  vertical  shafts  which  at  present  have  attained  depths  of  from 
1800  to  2800  ft.  Levels  are  run  out  at  intervals  of  100  to  200  ft.  A  large 
amount  of  work  is  necessary  to  discover  and  develop  the  ores  and  many 
thousand  feet  of  exploring  drifts  and  crosscuts  must  be  run  through 
country  rock  in  pursuit  of  the  various  ore  shoots.  Here  is  an  item 
estimated  at  30  cents  a  ton  for  exploration  work  that  is  quite  absent 
from  the  prominent  Lake  Superior  copper  mines. 


THE  NORTHWESTERN  COPPER  FIELD 


321 


In  sloping,  the  walls  are  found  to  be  soft  enough  to  require  constant 
timbering,  usually  by  square  sets.  In  many  places  the  effect  of  the 
faults  above  mentioned  has  been  to  produce  rock  so  soft  as  to  make  the 
timbering  especially  difficult  and  expensive.  As  a  rule  the  stopes  require, 
in  addition  to  the  timbering,  a  rock  filling  for  safety.  This  filling  is 
obtained  mainly  out  of  exploring  drifts  and  to  some  extent  from  the  sur- 
face, but  also  in  some  cases  it  has  been  found  necessary  to  make  rooms  in 
the  country  rock  for  the  mere  purpose  of  securing  waste  filling.  It 
does  not  appear  that  a  great  deal  of  waste  is  sorted  for  filling  out  of  the 
vein  itself,  although  it  suggests  itself  to  the  casual  visitor  that  this  is  a 
point  that  might  be  gone  into  rather  seriously.  Since  the  cost  of  trans- 
portation, concentrating,  smelting,  refining,  and  marketing  amounts 
to  at  least  $4  a  ton,  it  would  seem  as  if  the  point  at  which  ore  already 
broken  would  better  be  left  in  the  mine  than  treated  is  about  \Y±  to  J£ 
per  cent,  copper. 

All  the  mines  of  Butte  are  run  on  the  same  principle;  when  you 
describe  one  you  describe  them  all.  I  select  the  Anaconda  mine  as  a 
basis  for  comparison  with  the  Calumet  &  Hecla  in  Lake  Superior,  not 
for  the  purpose  of  drawing  any  invidious  comparisons  of  management, 
but  for  the  purpose  of  calling  attention  to  the  factors  which  I  believe 
establish  the  costs  per  ton.  In  such  a  comparison  it  is,  of  course,  absurd 

APPRAISEMENT  OF  COST  FACTORS  AT  ANACONDA  AND  AT  CALUMET  &  HECLA 


Calumet  & 
Hecla 

Anaconda 

Difference 
against 
Anaconda 

Cost  at  Mine  — 
Sloping  labor  

$1    10 

$1.65 

$0.56 

Exploration  .  .  . 

0  30 

0  30 

Supplies  including  timber  

0.50 

0.90 

0.40 

General  expense  

0  22 

0.50 

0.28 

Total 

$1  82 

$3  35 

Construction  and  amortization 

0  40 

0.40 

Outside  Costs- 
Freight  to  mill 

$2.22 
$0  15 

$3.75 
$0  15 

$1.53 

Cost  of  concentrating  

0.55 

Cost  of  smelting.  ... 

2.90 

2.35 

Cost  of  refining  and  marketing 

0  50 

1  21 

0  71 

Total  cost  

$3  27 

$7.86 

$4.59 

Percentage  milled,  Calumet  &  Hecla  mine,  100;  Anaconda  90. 
Percentage  smelted,  Calumet  &  Hecla  mine  3;  Anaconda  mine,  45. 
Pounds  copper  to  ton,  Calumet  &  Hecla  mine,  42;  Anaconda  mine,  63. 
.  21 


322 


THE  COST  OF  MINING 


to  lay  claim  to  accuracy,  but  since  the  object  of  this  discussion  is  to 
find  out  why  costs  are  different  in  different  places,  it  seems  proper  to 
enumerate  what  reasons  one  may  see. 

The  accompanying  table  shows  the  reported  costs  for  the  various 
mines  at  Butte  from  1903  to  1907.  Two  facts  are  worth  noting;  First, 
that  the  cost  for  mining  proper  tended  to  rise,  probably  on  account  of 
an  increased  proportion  of  development  work  undertaken  in  the  later 
years;  second,  that  the  cost  of  reduction  and  also  of  refining  and  market- 
ing came  down  notably.  This  reduction  is  probably  due  to  the  great 
metallurgical  improvements  that  have  been  effected  by  reason  of  the 
liberal  policy  of  the  Amalgamated  Copper  Company  in  its  expenditures 
to  provide  better  smelting  facilities  and  also  its  good  management.  A 
further  reason  for  diminishing  costs  in  smelting,  refining,  and  marketing 
is  a  diminution  in  the  metallic  contents  of  the  ore,  a  greater  amount 
being  concentrated  and  a  less  amount  being  smelted  and  refined  per  ton. 
In  the  case  of  the  Boston  &  Montana  a  considerable  saving  has  also  been 
effected  in  transportation  costs. 

COSTS  AT  MONTANA  COPPER  MINES 

ANACONDA  COPPER  COMPANY 
(Transportation  to  Anaconda  26  miles) 


Tons 

Mining 
per 
ton 

Freight  to 
smelter 
per  ton 

Reduction 
per  ton 

Refining  — 
marketing 
per  ton 

Total  cost 
per  ton 

1903 

1,392,835 

$3.49              $0.15 

$2.39              $2.30 

$9.23 

1904 

983,001 

3.73                0.15 

3.82                1.96 

9.66 

1905 

1,473,644 

3.56 

0.15 

3.00                1.11 

7.82 

1906 

1,521,310 

3.63                0.15 

2.27                1.08 

7.13 

1907 

1,401,948 

4.47 

0.16 

2.52                0.93 

8.08 

BOSTON  &  MONTANA 

(Transportation  to  Great  Falls) 


1903 

907,227 

$2.61 

$1.00 

$3.05 

$2.90 

$9.54 

1904 

988,866 

2.89 

1.00 

2.53 

1.81 

8.23 

1905 

1,138,307 

2.91 

1.00 

2.21 

1.69 

7.81 

1906 

1,209,805 

3.45 

0.93 

2.45 

0.90 

7.73 

1907 

1,156,785 

3.93 

0.76 

2.67 

0.92 

8.28 

BUTTE  &  BOSTON 

(Transportation  to  Anaconda) 


1903 

245,333 

$3.27 

$0.16 

$2.44 

$1.12 

$6.99 

1904 

202,286 

3.42 

0.17 

2.67 

1.05 

7.31 

1905 

260,433 

3.31 

0.19 

2.45 

0.79 

6.74 

1906 

246,593 

3.51 

0.20 

2.06 

1.25 

7.02 

1907 

331,629 

3.79 

0.21 

2.27 

0.85 

7.22 

THE  NORTHWESTERN  COPPER  FIELD 


BUTTE  COALITION 


323 


1 

1906 

149,101 

$3.94 

$0.60 

$3.94              $2.50 

$9.98 

1907 

412,169 

5.49 

0.29 

2.29 

NORTH  BUTTE 


1906 
1907 

259,650 
374,632 

$4.47 
4.53 

$0.20              $4.84 
0.20                4.04 

$9.51 

8.77 

It  is  to  be  noted  that  the  Butte  &  Boston  ores  have  cost  less  than  the 
others.  This  is  undoubtedly  due  to  their  lower  grade,  the  proportionate 
cost  for  smelting,  refining,  and  marketing  being  less.  On  the  other  hand, 
the  North  Butte  has  cost  more  on  account  of  its  higher  grade,  and  Butte 
Coalition  has  cost  more  than  the  average  on  account  of  the  large  expendi- 
tures for  improvements. 

The  following  discussion  refers  to  a  mine  at  Phoenix  in  southeastern 
British  Columbia,  where  the  external  conditions  are  not  unlike  those  of 
Butte,  but  the  underground  conditions  very  different.  The  inference 
which  might  be  taken  from  the  remarks  in  the  first  edition  that  the 
Granby  property  was  over-valued  was  soon  proved  to  be  justified.  The 
mine  is  now  nearly  exhausted. 

Granby  Consolidated  (iplS).— The  Granby  Consolidated  Mining, 
Smelting  and  Power  Company,  Limited,  British  Columbia,  has  mined  in 
three  years  1,995,948  tons  and  treated  2,088,381  tons.  The  ore  yielded 
by  actual  extraction  24.2  Ib.  copper,  0.38  oz.  silver,  and  0.06  oz.  gold  per 
ton.  The  silver  and  gold  are  worth  $1.42  per  ton,  equal  to  about  10  Ib. 
copper.  The  total  value,  therefore,  is  equivalent  to  a  little  more  than 
34  Ib.  copper,  and  this  may  be  taken  as  a  safe  basis  for  figuring  the  econo- 
mic performance  of  the  mine.  The  ore  is  chalcopyrite  disseminated 
through  limestone  altered  by  magmatic  waters  so  as  to  form  an  approxi- 
mately self-fluxing  gangue.  The  ore  will  not  concentrate,  but  is  smelted 
in  bulk.  A  large  part  of  the  mining  has  been  done  in  open  pits  with 
steam  shovels. 

This  company  does  not  issue  a  good  report  to  its  stockholders.  The 
statement  is  too  brief;  it  contains  no  estimate  of  ore  developed,  nor  does 

COSTS  PER  TON  AT  GRANBY 

Per  Ton 

Current  operating  cost;  mining,  smelting,  refining,  and  marketing  for  2,088,- 

381  tons  treated $3 . 39 

Current  construction  2,088,381  tons  treated JL?? 

Brought  forward $3 . 75 

Return  of  $14,000,000  invested  in  lands  and  equipment  at  5  per  cent,  interest 
and  5  per  cent,  annual  amortization;  this  being  sufficient  to  extinguish 
the  investment  in  15  years  with  an  output  of  11,200,000  tons 2.00 


Total 


$5.75 


324  THE  COST  OF  MINING 

it  give  any  intimation  of  the  probable  life  of  the  mine.  The  reports  give 
no  figures  about  the  capital  invested  in  lands  as  distinguished  from  capital 
in  equipment.  On  these  accounts  it  is  possible  that  the  costs  indicated 
may  not  do  the  property  justice. 

On  this  basis  the  selling  cost  of  copper  or  its  equivalent  in  New  York 
is  about  17  cents  a  pound. 

It  is  stated  in  the  reports  that  a  maximum  capacity  of  3500  tons  a 
day,  say  1,200,000  tons  a  year  has  been  provided.  If  this  volume  of 
operations  can  be  maintained  for  fifteen  years  the  amortization  charges 
on  the  invested  capital  may  be  computed  at  about  $1.16  per  ton  on  18,- 
000,000  tons.  This  will  equal  3^  cents  per  pound  copper  and  the  total 
cost  required  to  neutralize  the  investment  is  14  J^  cents  per  pound.  The 
idea  can  be  expressed  somewhat  differently,  as  follows: 

Cost  of  copper  for  current  operation  and  construction  per  Ib 11      cents 

Profit  per  ton  required   to  return  capital  in  15  years  with  5  per  cent. 

interest 3.5  cents 

Total  cost  required  at   maximum  output   for  15  years  to  make  the 

investment  justifiable 14.5  cents 

It  is  pertinent  to  remark  that  this  is  what  I  mean  in  all  cases  by 
amortization;  but  in  other  illustrations  I  have  attempted  to  amortize 
only  the  capital  invested  in  actual  plant,  while  in  the  case  of  the  Granby 
the  amortization  covers  the  entire  investment  in  lands  and  property 
besides  plant. 


THE  GRANBY  CONSOLIDATED  IN  LATEK  YEARS 

During  the  past  ten  years  this  concern  has  re-established  itself  by 
opening  up  a  new  mine  in  North  British  Columbia,  known  as  the  Hidden 
Creek  property  at  Anyox.  The  situation  is  rather  interesting,  an  arm 
of  the  sea  at  about  55°  north  latitude.  The  average  rainfall  is  about 
90  inches  in  a  year.  Most  of  it  occurs  from  October  to  March.  The 
summer  months,  from  April  to  September  inclusive,  are  comparatively 
dry,  the  rainfall  being  only  about  21  inches  or  3j^  inches  per  month. 
The  mean  temperature  for  the  year  is  about  47°,  which,  by  the  way,  is 
three  degrees  higher  than  that  of  Flagstaff,  Arizona.  The  dampness  of 
the  climate  makes  the  woods  exceedingly  thick  and  the  surface  of  the 
ground  is  almost  universally  covered  with  peat.  In  this  damp  climate 
the  destruction  of  vegetation  by  the  sulphur  fumes  is  infinitely  greater 
than  in  the  dry  regions  of  the  south;  for  miles  around  the  smeltery  the 
forest  has  been  killed,  giving  the  landscape,  which  is  naturally  very 
attractive,  a  sad  and  desolate  appearance. 

The  Granby  Company  has  had  the  peculiar  experience  of  operating 
only  on  a  smelting  basis.  Its  first  considerable  mine,  situated  in  South- 


THE  NORTHWESTERN  COPPER  FIELD  325 

east  British  Columbia  at  Phoenix,  gave  a  low-grade  smelting  ore,  on 
which  no  milling  has  ever  been  done.  The  Hidden  Creek  mine  is  also 
operated  entirely  by  smelting,  although  its  ores  scarcely  average  2J4  per 
cent.  At  both  plants  these  operations  have  been  carried  on  with  great 
efficiency,  but  it  is  a  very  open  question  whether  it  is,  after  all,  the  proper 
method.  About  40  per  cent,  of  the  ore  is  almost  pure  sulphide,  carrying 
about  3  per  cent,  copper,  and  60  per  cent,  of  sulphide  mixed  with  green- 
stone and  carrying  2  per  cent,  copper  or  less.  The  ore  reserves  as  of 
June  30th.,  1918  were  estimated  at  10,481,000  tons  averaging  2.29  per 
cent.  In  1916,  722,620  tons  was  treated  yielding  33.30  pounds  copper 
per  ton  and  about  30c  in  gold  and  silver.  The  cost  of  smelting  and  con- 
verting is  given  at  $1.80  per  ton,  but  to  this,  I  suppose,  should  be  added 
for  depreciation  about  50  cents  more,  making  a  total  of  $2.30  per  ton  or 
something  like  7  cents  per  pound  of  copper.  The  cost  of  mining,  includ- 
ing development  and  transportation  to  the  smelter  was  probably  about 
$1.30  a  ton  or  4  cents  per  pound  of  copper.  The  sum  of  these  costs  was 
about  11  cents  which  carries  the  metal  up  to  the  stage  of  blister  copper 
and  to  it  must  be  added  freight  and  refining  and  general  expenses,  making 
the  total  cost  in  1916  about  13  cents. 

There  is  reason  to  doubt  that  these  results  may  be  obtained  indefi- 
nitely; one  reason  being  that  up  to  the  present  all  the  ore  has  been  ob- 
tained through  tunnels.  There  will  presently  be  an  additional  cost  of 
mining  for  hoisting.  The  ore,  of  course,  is  obtained  in  a  wholesale  man- 
ner and  whether  this  can  be  continued  down  to  great  depths  is  more  or 
less  open  to  question.  The  orebodies  are  similar  in  size  to  those  mined 
for  many  years  by  the  Alaska  Tread  well  group,  the  description  of  whose 
operations  is  given  in  another  place;  but  where  finally  the  whole  enter- 
prise came  to  a  sudden  end  by  the  caving  of  the  mine  which  let  in  the  sea 
water.  This  latter  danger  is  not  present  at  Anyox. 

But,  as  matters  stand,  an  extraordinary  amount  of  ore  is  taken  out 
per  man  per  day;  something  like  6  tons.  At  the  smeltery  about  4  tons 
is  treated  per  man.  In  November,  1917,  about  1200  men  were  employed 
in  all  at  Anyox  and  produced  about  30,000,000  pounds  copper  per  year. 
If  this  is  a  representative  output  we  might  count  on  about  25,000  pounds 
of  copper  per  man  per  year,  which  is  nearly  as  good  as  that  of  the  Calumet 
and  Arizona  mines  of  Bisbee. 

The  full  development  of  a  property  like  this  requires  a  great  deal  of 
capital.  The  country  abounds  in  water  power  which  is  only  partially 
developed.  The  present  development  is  satisfactory  only  for  a  portion 
of  the  year.  During  the  winter  when  the  streams  are  partially  dried  up 
by  frost  it  is  necessary  to  use  some  steam.  The  water  power  costs  about 
4  mills  per  K.  W.  H.,  and  the  steam  power  about  5  times  that  much.  In 
treating  low  grade  ore  this  difference  is  important.  The  total  amount  of 
power  required  for  mining,  smelting  and  town  lighting  is  about  28  K.W.H. 


326  THE  COST  OF  MINING 

per  ton.  Since  the  yield  is  only  about  35  pounds  copper  per  ton  the 
water  power  would  only  cost  about  one-third  of  a  cent  per  pound  but  the 
steam  power  would  cost  1H  cents  per  pound.  To  obtain  a  sufficient 
supply  of  water  power  for  the  whole  year  would  justify  a  considerable 
outlay  of  capital. 

The  amount  of  coke  required  to  smelt  the  ore  is  about  9  per  cent. 
Of  late  I  am  informed  that  this  coke  has  been  costing  $14  a  ton,  twice  as 
much  as  before  the  war.  This  is  almost  prohibitive  for  it  means  about  4 
cents  per  pound  of  copper  for  fuel  alone. 

It  would  seem  as  if  the  most  likely  way  to  reduce  such  costs  would  be 
to  concentrate  the  ores,  or  at  least  such  portion  of  them  as  can  be  con- 
centrated. But  this  also  requires  a  large  investment.  It  is  said  that 
the  major  portion  of  them  may  be  successfully  treated  by  flotation  at  a 
recovery  of  about  80  per  cent.  With  cheap  power  it  would  seem  as  if 
this  might  be  done  at  a  reasonable  cost  and  the  saving  in  smelting  would 
be  very  great  indeed. 

All  these  operations  present  a  curious  contrast  with  those  of  most  of 
the  copper  mines  of  the  western  United  States  or  of  any  part  of  cordil- 
leran  region  for  that  matter.  Anyox  is  situated  on  an  admirable  harbor, 
open  all  the  year  round;  the  mines  are  within  two  miles  of  the  smelter; 
transportation  to  the  United  States  and  to  all  portions  of  British  Colum- 
bia and  southeast  Alaska,  is  conducted  through  protected  deep  water 
channels,  a  little  dangerous  it  is  true  on  account  of  strong  currents  and 
rocky  shores,  but  on  the  whole  exceedingly  cheap.  Ores,  coal,  coke  and 
supplies  might  be  carried  by  specialized  ships  such  as  those  used  for 
iron  ore  on  the  Great  Lakes  when  the  volume  of  traffic  becomes  great 
enough  to  justify  it.  There  is  no  geographical  reason  why  Anyox  should 
not  be  made  an  important  smelting  center  for  various  ores  or  concentrates 
that  might  be  obtained  along  the  coast.  The  development  of  transporta- 
tion in  the  manner  just  mentioned  would  seem  to  add  greatly  to  its 
present  advantages. 

From  all  these  conditions  it  seems  to  me  that  the  outlook  for  the 
Granby  company  is  encouraging.  The  principal  requirement  is  the 
gradual  and  wise  investment  of  sufficient  capital. 

As  matters  stand  the  capital  invested  in  real  estate,  timber  land, 
machinery,  buildings,  dwellings  and  equipment  as  stated  in  the  report 
for  1918  is  about  $9,000,000.  It  is  probable  that  most  of  this  should  be 
charged  to  the  Hidden  Creek  operations,  although  it  was  probably  not 
all  spent  there.  The  old  plants  in  Phoenix  are  of  doubtful  value.  The 
mines,  smelters  and  other  equipment  at  Anyox  cost  a  total  of  $6,000,000. 
That  is  only  $6  per  annual  ton. 

The  probability  of  the  extension  of  these  operations  is  largely  deter- 
mined by  the  geology  of  the  region.  The  orebodies  at  Hidden  Creek 
seem  to  be  in  most  respects  similar  to  the  large  sulphide  copper  deposits 


THE  NORTHWESTERN  COPPER  FIELD  327 

in  the  southwest.  They  are  on  the  periphery  of  a  green-stone  intrusion 
through  states,  probably  of  Jurassic  age  and  are  on  a  scale  quite  compar- 
able to  those  of  Jerome,  Arizona,  though  not  so  rich  in  copper.  The 
country  has  been  extensively  eroded  but  apparently  not  deep  enough  to 
carry  away  the  cream  of  the  mineralization.  The  great  coast  range, 
particularly  of  British  Columbia  is,  indeed,  very  extensively  eroded  along 
its  main  axis  where  great  intrusions  of  granite  have  cut  through  forma- 
tions of  moderate  geological  age,  but  on  both  sides  there  are  many  smaller 
ones  which  have  scarcely  penetrated  through  the  sedimentary  rocks. 
The  geology  has  been  only  roughly  mapped,  but  it  appears  that  the  area 
of  this  great  batholith  is  almost  equal  to  that  of  the  State  of  New  York. 
According  to  the  maps  it  is  800  miles  long.  The  sum  total  of  minerals 
around  such  a  mass  as  this  must  be  great,  but  how  much  of  it  is  com- 
mercially available  may  only  be  guessd  at. 


CHAPTER  XVIII 

COPPER  MINES  IN  VARIOUS  DISTRICTS 

TENNESSEE   COPPER  Co. — UTAH   CONSOLIDATED — MOUNT  LYELL  IN    TASMANIA — 
NORTHERN   CALIFORNIA — FIRST    NATIONAL    IN    1908 — GREENE    CANANEA    IN 

1908  AND  LATER WALLAROO  AND  MOONTA — FlSSURE  VEINS  AT  GLOBE,   ARIZONA 

— OLD  DOMINION — ARIZONA  COMMERCIAL. 

In  the  following  chapter,  as  well  as  in  others,  there  are  retained  from 
the  first  edition  some  remarks  about  mines  based  upon  records  which  are 
now  antiquated.  I  have  not  been  able  to  revise  them.  In  some  cases 
the  mines  themselves  have  nearly,  or  quite,  gone  out  of  existence.  Never- 
theless, I  have  been  surprised  on  several  occasions  to  find  that  some  of 
these  references  still  have  a  practical  value  and  I  retain  some  of  them  in 
the  belief  that  other  engineers  may  have  the  same  experience. 

TENNESSEE  COPPER  COMPANY — 1908 

Only  one  mine  of  importance  is  found  in  the  United  States  east  of 
Lake  Superior.  It  is  owned  by  the  Tennessee  Copper  Company,  which 
works  several  large  lenses  of  cupriferous  pyrite.  All  the  ore  must  be 
smelted  in  the  blast  furnace.  For  ores  of  this  character  I  believe  this 
company  does  the  cheapest  work  in  the  world.  Its  reports  are  excellent 
and  reveal  not  only  the  operating  costs  in  detail,  but  also  the  plant 
expenditure  and  the  ore  in  sight. 

The  external  factors  are  favorable.  Fuel  is  cheap  and  transportation 
to  markets  much  less  than  for  western  mines.  Wages  are  about  20 
cents  an  hour,  but  I  do  not  believe  this  means  cheap  labor. 

The  internal  factors  are  favorable,  with  the  exception  of  the  necessity 
of  smelting  all  the  ore.  This  is  a  most  powerful  element  of  high  cost. 
The  ore  yields  only  32%  Ib.  copper  to  the  ton. 

The  current  operating  costs  for  1907  were  as  follows: 

Mining $1.22 

Smelting 2. 14 

Administration,  etc 0 . 49 


Total $3.85 

To  this  I  think  should  be  added  21  cents  a  ton  for  the  use  of  the 
mining  plant  and  47  cents  a  ton  for  the  use  of  the  railroad  and  the  smelting 
plant,  making  a  total  of  $4.53. 

In  detail  these  costs  are  as  follows: 

328 


COPPER  MINES  IN  VARIOUS  DISTRICTS  329 

Development $0. 1318 

Mining,  hoisting,  etc 0 . 9389 

Crushing  and  sorting 0 . 0804 

General..  0.0851 


Total  current  cost $1 .2162 

Add  cost  of  preliminary  development  amortized  in  15  years  at 

5  per  cent,  interest  and  5  per  cent,  annual  amortization.  ...  0.06 

Mining  plant  similarly  amortized 0. 15 

Transportation  to  smelter $0. 1329 

Blast  furnace 1 . 6279 

Engineering  and  laboratory 0 . 0628 

General 0.0852 

Converting 0 . 2402 


Total  current  smelting  cost $2 . 1430 

Add  amortization  of  smelting  plant  and  railway  as  above 0. 47 

Add  administration,  shipping,  refining  and  selling  expenses. . .  0.49 

Grand  total $4. 5292 

On  the  basis  thus  figured,  anything  received  above  12  cents  a  pound 
for  copper  in  New  York  is  applicable  to  dividends,  and  anything  above  14 
cents  is  net  profit  after  allowing  for  the  return  with  interest  of  money 
invested  in  the  plant.  These  costs  are  higher  than  the  average  by  from 
5  to  10  per  cent.  The  costs  for  1907  were  high  on  account  of  unfavorable 
economic  conditions  throughout  the  country.  It  should  be  explained 
further  that  in  addition  to  the  copper  the  sulphur  is  being  utilized  so 
that  in  future  the  property  will  not  be  wholly  a  copper  mine.  Its  opera- 
tions will  be  nearly  equivalent  to  those  of  the  Rio  Tinto  Company  in 
Spain. 

The  subsequent  history  of  this  concern  has  been  unfortunate.  Copper 
is  no  longer  the  chief  product.  Sulphuric  acid  is  being  made  at  the  rate 
of  300,000  tons  a  year  and  sold  under  a  long  term  contract  at  pre-war 
prices.  The  result  has  been  disastrous.  The  ore  bodies  are  holding  out 
well  however  at  the  1200  ft.  level,  and  the  development  of  the  fertilizer 
business  gives  an  assurance  of  future  earning  power.  Acid  is  being  made 
under  the  high  prices  of  1919  for  about  $5.00  a  ton  and  copper  for  about 
20  cents  a  pound. 

UTAH  CONSOLIDATED — 1908 

This  company  has  mined  since  1899  large  deposits  of  cupriferous 
pyrite  at  Bingham,  Utah,  averaging  by  actual  recovery  for  five  years 
60  Ib.  copper,  1.33  oz.  silver,  and  0.104  oz.  gold  per  ton.  The  silver  and 
gold  are  worth  about  $2.88  per  ton,  so  that  with  copper  at  14  cents  per 
pound  there  is  a  total  metallic  extraction  equivalent  to  80  Ib.  copper. 
The  ore  occurs  in  large  lenses  or  shoots  in  limestone.  It  is  approxi- 
mately self-fluxing,  there  being  a  moderate  excess  of  iron  over  silica. 


330  THE  COST  OF  MINING 

Most  of  the  mining  has  been  done  through  adit  levels.  The  mining  plant 
is  not  extensive.  The  ore  is  delivered  to  the  railroad  over  an  aerial  tram- 
way about  12,000  ft.  long.  It  is  transported  by  rail  about  25  miles 
to  the  smelter. 

The  external  conditions  are,  for  the  Rocky  Mountain  region,  good, 
and  the  internal  factors,  with  the  single  exception  of  the  requirement 
of  smelting  all  the  ore,  very  favorable  for  cheap  work.  The  ore  is  soft, 
uniform,  and  occurs  in  good-sized  bodies.  The  stoping  is  done  in  square- 
set  rooms.  The  item  of  timbering  must  be  one  of  the  chief  mining 
expenses. 

There  is  nothing  in  the  reports  to  show  the  mining  or  smelting  losses; 
but  with  this  exception  the  reports  are  excellent.  They  give  the  stock- 
holders in  brief  but  sufficient  outline  the  costs  and  financial  results  of 
the  business. 

In  the  five  years  ending  December  31,  1907,  the  costs  were  as  follows: 

COSTS  PER  TON  FOR  FIVE  YEARS,  UTAH  CONSOLIDATED 

Mining,  1,260,453  tons $1 . 73 

Development,   1,400,000  tons 0. 30 

Transportation,  smelting,  and  refining,  1,276,393  tons 2.80 

General  expense,  1,276,393  tons 0. 23 

Current  construction,  1,276,393  tons 0. 34 

Amortization  at  5  per  cent,  interest  and  5  per  cent,  annual  amortization  of 
$1,232,274  invested  in  plant  at  beginning  of  period;  this  being  sufficient  to 

retire  the  investment  in  15  years — proportion  for  five  years 0. 48 


Total  cost $5. 88 

Recollecting  that  the  ore  contains  in  copper,  gold,  and  silver  the 
equivalent  of  80  Ib.  copper  to  the  ton,  we  get  an  average  complete  cost 
of  producing  copper  of  7.35  cents  per  pound.  This  may  be  divided 
as  follows:  actual  operating  cost,  6.75  cents;  allowance  for  return  of  work- 
ing plant,  0.60  cents.  Of  course,  everything  received  above  6.75  cents 
for  copper  or  its  equivalent  in  New  York  goes  to  the  stockholders  as 
dividends. 

The  report  of  the  Utah  Consolidated  for  the  year  1908  exhibits  con- 
ditions that  are  not  comparable  with  certainty  to  those  of  former  years. 
The  smelter,  which  was  the  principal  plant  asset  of  the  company,  had 
to  be  permanently  shut  down  on  account  of  a  decision  of  the  court  to  the 
effect  that  its  operation  was  inimical  to  the  agricultural  interests  of  the 
Salt  Lake  valley.  In  1908  the  ore  was  treated  at  the  Garfield  smelter 
of  the  American  Smelters  Securities  Company,  under  terms  that  the 
Utah  Consolidated  believes  to  be  unfavorable.  Certain  deductions  were 
made  from  the  metal  contents  of  the  ores  under  this  contract.  The 
exact  amounts  deducted  are  not  stated. 

On  the  face  of  the  returns  the  record  for  the  year  was  disappointing. 
The  costs  were  as  follows: 


COPPER  MINES  TN  VARIOUS  DISTRICTS 


331 


Mining  248,215  tons 

Ex.  and  development 

Mine  plant 

Smelting  and  transportation 

Depreciation  and  general 

Current  construction 

Add  refining  and  marketing,  bullion  actually  produced. . 


$461,711 

$1.86 

73,441 

.30 

3,869 

.01 

921,239 

3.71 

127,569 

.52 

129,621 

.52 

120,400 

.48 

Total  operating 


Copper  metal,  Ib . . 

Silver,  oz 

Gold,  oz 


$1,837,850       $7.40 

10,648,243 

265,284 

23,441 


At  the  prices  current  during  the  year  this  equals  15,225,000  Ib.  refined 
copper.  This  is  61.4  Ib.  per  ton.  Dividing  the  operating  cost  of  $7.40 
per  ton  by  this  amount  we  get  12  cents  as  the  cost  of  copper  per  pound. 

The  ore  reserves  have  been  increased  so  that  there  is  no  reason  to 
change  the  amortization  charge  of  48  cents  a  ton  given  above.  This,  on 
account  of  the  diminished  yield  of  the  ore  is  now  equal  to  about  0.8  cents 
per  pound.  Adding  this  we  get  12.8  cents  as  the  selling  cost  of  copper 
for  the  year. 

Needless  to  remark  that  this  showing  is  disastrous  and  undoubtedly 
the  stockholders  will  await  with  impatience  the  inauguration  of  new 
smelter  arrangements,  which,  it  is  announced,  will  be  provided  by  the 
new  International  Smelting  Company. 

SUBSEQUENT  HISTORY  OF  UTAH  CONSOLIDATED 

Following  the  inference  made  in  the  last  paragraph  the  operating 
results  in  the  next  few  years  were  not  very  encouraging,  but  later,  through 
the  discovery  of  bodies  of  lead  ore,  the  securing  of  satisfactory  smelting 
rates,  and  the  pursuit  of  a  liberal  plan  of  development  the  property  re- 
gained its  earning  power  and  has  been  profitable  ever  since. 


Copper  Ore 

Pounds  Copper 

Lead  Ore 

Pounds  Lead 

Profit 

1909 

280,637 

10,043,900 

$  154,267 

1910 

182,204 

7,489,471 

65  348 

1911 

162,522 

9,162,023 

8,305 

3,311,000 

438,430 

1912 

159,143 

6,506,814 

24,243 

8,732,000 

603,923 

1913 

181,077 

7,710,668 

70,889 

19,208,000 

630,828 

1914 

153,345 

7,584,391 

48,492 

14,588,000 

565,665 

1915 

207,119 

8,836,091 

65,129 

17,777,000 

1,128,122 

1916 

36,0,034 

12,211,118 

74,542 

18,175,000 

1,924,176 

1917 

226,536 

7,968,165 

58,247 

13,014,000 

723,323 

1918 

221,651 

8,476,197 

31,725 

812,000 

252,763 

2,134,068 

85,988,838 

381,372 

102,419.000 

5,486,845 

332  THE  COST  OF  MINING 

It  appears  that  approximately  2,500,000  tons  of  ore,  of  which  the 
copper  ore  as  above  ran  only  2  per  cent,  and  the  lead  ores  13  per  cent.,  in 
each  case  carrying  say  1.5  ounces  silver  and  SI. 50  in  gold,  have  been 
made  to  yield  profits  of  $2.20  per  ton.  In  1915  the  costs  were  about  as 
follows ; 

Per  Ton 

Mining $565,000 $2. 10 

Development,  20,000  ft.  at  $8.30    166,000 0. 60 

Smelting 706,000 2 .  60 

Administration,  etc 42,000 0.15 

Refining,  etc 131,000 0 . 48 


Total  cost  about $1,610,000 $5 . 93 

In  1911  the  ore  reserves  were  estimated  at  only  300,000  tons,  but  it 
will  be  noted  that  1,800,000  has  been  mined  since — a  good  example  of  the 
fallacy  of  valuing  mines  on  ore  reserves. 


MOUNT  LYELL 

The  Mount  Lyell  Company  operates  a  cupriferous  pyrite  mine  and  a 
smelter  in  western  Tasmania.  The  original  Mount  Lyell  deposit  was  a 
great  mass  of  nearly  pure  iron  pyrite  containing  only  0.6  per  cent,  copper, 
but  a  portion  of  it  had  been  enriched  near  the  surface.  This  deposit  has 
been  mined  almost  wholly  from  an  open  pit.  Another  mine,  however, 
called  the  North  Mount  Lyell  produces  a  much  more  siliceous  ore 
averaging  6  per  cent,  copper.  This  ore  has  to  be  mined  underground. 
During  the  four  years,  1905-1908,  which  will  presently  be  reviewed, 
about  60  per  cent,  of  the  ore  has  come  from  the  Mount  Lyell  proper 
and  40  per  cent,  from  the  North  Mount  Lyell. 

The  external  factors  are  probably  nearly  average  for  English-speaking 
countries.  The  climate  is  rainy,  but  nor  more  so  than  Cornwall  or 
Scotland.  The  mine  is  situated  near  the  coast,  so  that  supplies  must  be 
reasonable  in  cost,  and  transportation  of  copper,  even  to  England,  must 
cost  less  than  transportation  of  western  American  copper  to  New  York. 

The  internal  factors  are,  for  a  smelting  enterprise,  very  favorable. 
The  ores  are  mined,  thanks  to  the  large  proportion  obtained  from  the 
open  pit,  for  less  than  $2  a  ton.  The  smelting  is  largely  pyritic  and  the 
proportion  of  coke  used  in  the  charge  is  said  to  be  only  one  per  cent. 

In  four  years  1,690,531  tons  were  mined.  In  the  same  period  the 
ore  reserves  diminished  from  4,666,000  to  4,107,000  tons,  a  loss  of  559,000 
tons.  At  this  rate  of  loss  the  property  would  last  thirty  years,  but  s'nce 
(1)  a  large  part  of  the  low-grade  pyrite  which  hitherto  has  been  mined 
from  open  pits  must  be  taken  at  greater  cost  from  underground  and,  (2) 
there  does  not  seem  to  be  a  first-class  reason  to  believe  that  the  rich  ores 
of  North  Mount  Lyell  can  be  found  in  the  same  abundance  for  a  long 


COPPER  MINES  IN  VARIOUS  DISTRICTS  333 

period,  it  seems  safer  to  estimate  a  life  of  twenty  years  as  the  amortizing 
period  of  the  investment.  On  this  basis  we  may  compute  the  costs  as 
follows; 

COSTS  PER  TON  AT  MOUNT  LYELL 

Mining  1,690,531  tons $1.05 

Stripping  1,690,531  tons : .  0. 26 

Developing  1,131,258  tons 0.50 


Total  mining $1.81 

Smelting  1,698,793  tons $1 .  78 

Converting  1,698,793  tons 0. 34 

Railway  expenses 0.27 

Freight  and  marketing 0 . 72 


Total  for  smelting,  refining,  and  marketing $3. 11 

General  expense,  1,698,795  tons $0. 25 

Use  of  plant;  being  5  per  cent,  interest  and  3  per  cent,  amortization  for 

four  years  on  average  invested  (£376,000) 0 . 35       0 . 60 


Total  cost $5.52 

The  actual  returns  of  metal  from  the  Mount  Lyell  ores  have  been 
34,210  long  tons  copper,  3,056,231  oz.  silver,  and  91,815  oz.  gold.  The 
extraction  has  been  86  per  cent,  copper,  99  per  cent,  silver,  and  105  per 
cent,  of  the  gold  estimated  by  assay  to  be  contained  in  the  ore.  There  is 
no  statement  as  to  whether  the  ore  treated  is  given  in  long  tons  or  short 
tons,  but  it  is  probably  safe  to  assume  that  the  copper  output  is  given  in 
long  tons.  We  have  on  this  basis  a  recovery  of  45.5  Ib.  copper,  1.8  oz. 
silver,  and  0.054  oz.  gold  per  ton  of  ore  treated.  The  gold  and  silver  are 
worth  $2.18  per  ton,  at  average  prices.  This  is  the  equivalent  of  15H 
Ib.  copper,  and  we  may  figure  the  metallic  contents  altogether  as  equal 
to  61  Ib.  copper.  On  this  basis  the  cost  per  pound  of  copper  is  9  cents. 

NORTHERN  CALIFORNIA  COPPER  MINES — 1908 

During  the  last  twelve  years  a  considerable  output  of  copper  has  been 
obtained  in  Shasta  County  from  a  number  of  pyrite  deposits  that  are 
described  as  occurring  in  zones  of  intensely  crushed  granitic  porphyries. 
The  pyrite  masses  have  been  considerably  enriched  by  the  leaching  of 
copper  from  the  upper  portions  and  the  deposition  of  it  in  a  lower  part 
of  the  same  deposit.  It  is  to  be  inferred  that  the  original  pyrites,  below 
the  zone  of  enrichment,  are  pretty  low  grade,  probably  too  low  in  many 
cases  to  be  payable.  The  following  description  of  the  industry  is  copied 
from  the  report  on  the  "  Production  of  Copper  in  1907,"  by  L.  C.  Graton 
of  the  U.  S.  Geological  Survey.  The  output  of  copper  for  that  year  is 
stated  at  28,000,000  Ib. 

"  The  ores  smelted  in  1907  yielded  approximately  3  per  cent,  of  copper. 


334  THE  COST  OF  MINING 

The  yield  per  ton  in  gold  was  about  $1.30  and  in  silver  2.1  oz.,  or  $1.40, 
which  combined  are  equivalent  to  4.5  cents  per  pound  of  copper.  In 
the  aggregate  several  million  tons  of  ore  are  blocked  out  in  the  mines  of 
the  Balaklala,  the  Bully  Hill,  the  Mammoth,  the  Mountain,  and  the 
Trinity  companies.  The  limits  of  these  orebodies  are  now  pretty  well 
defined,  and  it  is  doubtful  if  new  bodies  can  be  discovered  as  rapidly  as 
the  present  ones  are  exhausted.  The  first  large  body  to  be  worked  in  the 
district,  that  at  Iron  Mountain,  is  now  nearly  worked  out,  and  in  spite 
of  the  fire  which  has  been  burning  for  several  years  practically  all  the  ore 
will  be  extracted. 

"Most  of  the  orebodies  thus  far  discovered  are  developed  by  workings 
not  more  than  500  ft.  deep,  but  the  Great  Western  workings,  in  the 
Afterthought  district,  exceed  this  depth,  and  in  the  Bully  Hill  district 
the  lowest  level  is  about  900  ft.  below  the  outcrop.  Owing  to  the  rugged 
topography,  tunnels  afford  easy  access  to  the  orebodies,  but  in  a  few- 
places  winzes  from  these  tunnels  are  required.  Open  cutting  is  employed 
in  part  at  the  Balaklala  and  the  Afterthought  mines.  Water  is  not 
troublesome.  Up  to  the  present  time  square  setting  has  been  chiefly 
employed.  At  the  Mammoth  mine  the  horizontal  slicing  system,  with 
subsequent  caving,  is  employed,  and  the  quantity  of  timber  required, 
which  was  large  at  the  start,  is  gradually  being  lessened.  Methods 
requiring  less  timber  may  be  employed  in  the  mines  that  are  now  in  the 
development  stage.  Native  timber  is  used.  Electric  power  is  employed 
almost  exclusively  and  is  derived  from  the  lines  of  the  Northern  California 
Power  Company.  Much  of  the  coke  comes  from  Australia.  The 
Southern  Pacific  Railroad  crosses  the  district.  The  Iron  Mountain  and 
Hornet  mines  are  connected  with  it  by  a  private  railway,  and  the  Mam- 
moth by  an  aerial  tramway,  which  has  been  replaced  by  a  combination 
steam  and  electric  road.  An  aerial  tram  connects  the  Balaklala  and 
Trinity  mines  with  the  Balaklala  smelter  at  Coram.  The  Sacramento 
Valley  and  Northeastern  Railway  was  completed  to  the  Bully  Hill 
district  early  in  1908.  Work  has  been  begun  on  a  line  to  the  Afterthought 
district.  European  labor  is  employed  chiefly. 

uPyrite  smelting  is  now  applied  almost  exclusively  to  the  ores  and  is 
very  successful.  Even  the  zincky  ores  of  the  Afterthought  region  are 
handled  by  the  aid  of  a  hot  blast.  Some  experiments  are  under  way  to 
save  the  zinc  now  lost  at  this  plant,  and  some  steps  in  this  direction  may 
be  undertaken  at  Bully  Hill  also.  The  Mammoth  Company  was  the 
largest  producer  of  the  year,  but  turned  out  only  matte,  which  was  con- 
verted at  the  United  States  smelter  in  the  Salt  Lake  Valley.  The  con- 
struction of  converters,  as  well  as  of  two  additional  blast  furnaces, 
however,  was  practically  completed  in  1907.  During  that  year  the  fine 
ore  was  shipped  mostly  to  sulphuric-acid  works  near  San  Francisco,  where 
the  resulting  cinders  were  smelted  for  their  copper.  The  Mountain 


COPPER  MINES  IN  VARIOUS  DISTRICTS 


335 


Copper  Company,  owing  to  the  raising  of  the  injunction  against  its 
Keswick  plant,  treated  part  of  its  output  at  that  smelter  and  part  at  its 
works  at  Martinez,  on  San  Francisco  Bay,  where  it  has,  in  addition  to  a 
small  electrolytic  refinery,  a  sulphuric  acid  and  fertilizer  plant  that 
utilizes  phosphate  from  Utah  and  Idaho.  The  Afterthought  smelter 
shipped  its  matte  to  Utah  for  conversion.  Some  Shasta  County  copper 
ore  was  treated  at  the  Garfield  smelter.  The  Bully  Hill  smelter,  which 
has  been  idle  since  early  in  1906,  was  enlarged  and  equipped  for  pyritic 
smelting.  A  reverberatory  was  also  added  for  the  treatment  of  fines. 
Work  was  actively  carried  on  by  the  Balaklala  Company  in  the  construc- 
tion of  its  new  1500-ton  smelter  until  October,  when  construction  was 
stopped,  not  to  be  resumed  until  1908.  This  plant,  which  will  treat  the 
Balaklala  and  Trinity  ores,  will  make  matte,  which  may  be  converted 
at  the  Mammoth  works  pending  a  decision  regarding  the  resumption  of 
construction  of  the  San  Bruno  smelter." 

The  United  States  Smelting,  Refining  &  Mining  Company  gives  no 
information  worth  speaking  of  about  its  operating  results.  This  is  un- 
fortunate, for  their  Mammoth  mine  is  now  the  largest  producer  in 
Northern  California. 

The  only  report  I  have  seen  upon  the  mining  operations  of  this 
district  is  that  of  the  First  National  Copper  Company.  This  concern 
took  over  in  1908  the  stock  of  the  Balaklala  Consolidated  Copper  Comp- 
any, which  had  evidently  been  organized  on  an  inflated  basis.  The  new 
company  with  a  paid-up  capital  of  $1,500,000,  bought  all  the  stock  of  the 
old  one,  which  was  capitalized  at  $10,000,000.  The  comparison  of  the 
balance  sheets  of  the  two  companies  is  rather  amusing.  The  First 
National  Company  has  no  liabilities  to  speak  of  except  its  own  capital 
stock,  and  no  assets  except  the  capital  stock  of  the  Balaklala,  each 
amounting  to  $1,500,000.  Turning  to*  the  Balaklala  balance  sheet  we 
discover  " Mines  and  Mining  Property"  put  down  at  $8,688,777.05. 
This  item  was  evidently  a  fancy  price  put  upon  the  undeveloped  and 
unequipped  mining  claims — a  good  example  of  mining  finance  in  boom 
times.  It  is  also  a  good  example  of  the  wisdom  of  keeping  the  item  of 
real  estate,  the  opportunity  to  mine,  out  of  one's  computations  of  mining 
cost. 

Other  assets  on  the  Balaklala  balance  sheet  undoubtedly  represent 
investments,  as  follows: 


Cost  of  outside  properties 

MINE  CONSTRUCTION: 

Air  drill  equipment 

Locomotives  and  cars 

Aerial  tramway  and  connections 

Buildings 

Teams  and  equipment 


$37,015.77 


$  24,759.23 

18,956.23 

202,499.21 

49,985.49 

1,699.43 


292,899.59 


336  THE  COST  OF  MINING 

SMELTER  CONSTRUCTION: 

Smelter $873,682.30 

Converter 102,512.60 

Steam  railroad 83,279.41 

Teams  and  equipment 3,931 . 28 

1,063,405.59 
Property  in  dwellings,  etc 88,346 . 55 


Total  plant $1,481,667.50 

There  is  in  addition  working  capital  in  inventories,  supplies  and 

cash,  approximately $600,000  .00 

We  might  fairly  add  to  this  about  $400,000  for  the  cost  of  developing 
the  mine  and  then  the  total  cost  of  starting  the  enterprise  will  amount 
to  approximately  $2,500,000. 

The  president  of  the  company  has  the  following  to  say  in  the  first 
annual  report: 

"  During  the  year  we  operated  the  mine  for  sixty  days  and  the  smelter  for 
fifty-two  days.  In  the  commencement  of  operations  we  expected  to  find  a  num- 
ber of  things  that  would  require  alterations  and  would  more  or  less  delay  us  in 
getting  down  to  a  working  basis.  I  am  glad  to  say  that  we  are  gradually  over- 
coming all  difficulties  and  are  now  producing  blister  copper. 

"  Attention  is  called  to  the  fact  that  we  only  operated  part  of  two  months  and 
one  full  month,  and  our  expenses  are  for  three  full  months. 

"Commencing  operations  we  had  considerable  waste  in  opening  our  drifts, 
which  has  reduced  the  value  of  our  ores,  but  all  indications  are  that  the  ore  de- 
veloped will  average  about  2.7  per  cent,  copper,  0.025  oz.  gold,  0.75  oz.  silver. 

"Our  costs,  based  on  present  operations,  will  be  materially  reduced  when 
we  are  mining  and  smelting  to  our  capacity  of  1250  tons  of  ore  per  day." 

At  average  prices  the  ore  above  mentioned  would  contain  the  equiva- 
lent of  60  Ib.  copper  per  ton.  It  is  not  stated  whether  this  is  the  actual 
yield,  or  only  the  assay  value  from  which  losses  will  have  to  be  deducted. 

While  it  is  manifestly  unfair  to  calculate  costs  on  the  interrupted 
operation  of  only  three  months,  I  give  the  following  costs  for  what  they  are 
worth : 

BALAKLALA    CONSOLIDATED   COPPER  COMPANY — SUMMARY  OF  MINE  OPERATIONS 
OCTOBER,  NOVEMBER,  AND  DECEMBER,  1908 

Cost  per 
ton 

Development $1,452.47  $0.077 

Mining 29,866. 14  1 . 593 

Compressor 787 . 93  0. 042 

Air  drills 1,199.62  0.064 

Mine  tramway 1,807.31  0.096 

Timbering 1,620.97  0.089 

Power 1,560.36  0.083 

Shop's  expense .- 245.64  0.013 

General  expenses,  including  taxes  and  insurance 4,250.02  0.227 


Carried  forward > $42,790.46         $2.284 


COPPER  MINES  IN  VARIOUS  DISTRICTS  337 

Brought  forward $42,790.46  $2.284 

Surface  and  road  repairs 118 . 03  0 . 006 

Repairs  to  buildings 197.31  0.010 

Stable  expense 438 .10  0 . 023 

Steel  sharpening 666 .36  0 . 035 

Special  construction 1,244 .00  0 . 066 


Total  cost $45,454.26  $2 . 424 

Ore  mined,  18,751  tons. 

SUMMARY  OP  SMELTER  OPERATIONS 

OCTOBER,  11  DAYS                    NOVEMBER,  11  DAYS                DECEMBER,  31  DAYS 

Cost  per  ton 

Amount  of  ore 

Converters $1,750.77  0.070 

Blast  furnaces 51,095 .00  2 . 035 

Matte  and  slag  casting 4,454. 52  1 .   77 

Repairs  to  plant  buildings 1,444 .51  0 . 057 

Repairs  to  ore  bins 2,110.78  0.084 

Railroad — operation  and  maintenance 2,697. 14  0. 108 

Unloading  custom  ore 1,190 . 72  0 . 047 

Sampling  mill  for  custom  ore 887 .75  0 . 035 

Sampling  mill  for  sulphides 2,253.35  0.089 

Lighting,  electric 1,148.75  0.045 

Water  supply  and  pumping  plant 424 .78  0 . 017 

Assay  office 800.44  0.032 

General  expenses,  including  insurance  and  taxes 3,199.48  0. 128 


Total  expense $73,457.99         $2.924 

Ore  smelted,  25,121  tons 66,961.50  2.665 


Furnace  products  on  ha»d — Total  cost  (see  Balance  Sheet)    $140,419 .49         $5 . 589 
Operating  tramway 0 . 304 

Total  cost  per  ton $5 . 893 

Assuming  that  the  60  Ib.  mentioned  above  represents  recovered 
metals,  these  costs  indicate  operating  costs  of  about  10  cents  per  pound. 
To  this  will  have  to  be  added  an  annual  charge  of  6  per  cent,  on  $1,500,000 
for  depreciation  of  plant  expressed  in  construction,  equal  to  $90,000 
a  year.  General  expense,  including  taxes,  insurance,  and  administra- 
tion, will  be  $35,000  more.  On  an  output  of  250,000  tons  these  items 
will  be  50  cents  per  ton  and  the  total  operating  cost  of  copper  will  ap- 
proach 11  cents. 

The  amortization  of  $2,500,000  invested  in  the  property  with  4 
per  cent,  interest  at  15  cents  copper  and  11  cents  cost,  equaling  4  cents 
a  pound  profit,  with  an  output  of  15,000,000  Ib.  a  year,  will  require 
five  years  operation,  1,250,000  tons  of  ore,  and  75,000,000  Ib.  of  copper. 
Whether  the  company  has  this  amount  in  sight  or  not  is  not  stated. 

GREENE  CONSOLIDATED,  CANANEA,  MEXICO — 1908 

This  company  has  a  very  large  property  near  the  Arizona  border 
in  the  state  of  Sonora,  Mexico.  In  1906  the  Greene-Cananea  Company 


338 


THE  COST  OF  MINING 


was  formed  to  consolidate  the  old  Greene  Consolidated  Copper  Company, 
and  the  Cananea  Central  Copper  Company.  The  management  has  been 
completely  reorganized. 

The  record  of  the  old  Greene  Consolidated  Company  was  as  follows: 


Greene  Consolidated 

Output  and  dividends 

Lb.  copper 

Dividends 

1901 

28,826,854 

$400,000 

1902 

38,268,407 

1903 

42,310,544 

600,000 

1904 

55,014,339 

1,200,000 

1905 

63,005,848 

2,800,000 

1906 

55,943,739 

1,200,000 

283,369,731 

$6,200,000 

The  dividends  are  up  till  March,  1907. 

It  appears  that  up  to  that  date  the  dividends,  which  must  represent 
approximately  the  earnings,  were  equal  to  2.19  cents  per  pound  copper 
produced.  If  we  count  as  copper  the  value  of  silver  and  gold  produced, 
the  earnings  per  pound  would  be  about  2  cents.  Since  in  those  particular 
years  the  average  price  of  copper  was  about  14.9  cents,  we  may  conclude 
the  average  cost  to  have  been  about  12.7  cents;  and  since  at  the  end  of  the 
period  it  was  found  necessary  to  undertake  large  improvements,  it  is 
altogether  probable  that  something  should  be  added  for  depreciation. 

No  estimate  of  the  amount  of  ore  in  sight  is  given  in  the  report  for  1908. 

The  report  goes  into  the  question  of  mining  costs  so  thoroughly  and 
with  so  much  good  sense  and  poise  that  I  quote  largely  from  the  state- 
ments of  the  general  manager,  Mr.  L.  D.  Ricketts.  It  will  be  seen  that 
the  reduction  of  costs  in  all  departments  has  been  enormous.  But  it 
occurs  to  me  to  point  out  one  or  two  reasons  for  accepting  with  a  little 
caution  the  conclusion  that  the  process  of  reduction  is  so  firmly  intrenched 
that  further  reductions  are  inevitable. 

First,  let  me  note  that  during  1908  the  monthly  tonnage  treated  was 
about  60,000  against  nearly  100,000  in  former  periods.  It  is  just  possible 
that  the  reduced  tonnage  may  have  great  advantages  over  the  full 
tonnage  in  that  it  is  secured  with  selected  labor  and  from  selected  places. 

Either  of  these  advantages  may  be  of  great  consequence  in  the  matter 
of  costs,  as  has  been  pionted  out  in  the  chapter  on  the  Value  of  Mining 
Property.  It  comes  as  an  example  of  how  costs  go  down  in  periods  of 
depression. 

Second,  it  is  worth  considering  whether  the  period  under  review  does 
not  get  great  advantages  from  the  reconstruction  that  preceded  it.  All 


COPPER  MINES  IN  VARIOUS  DISTRICTS  339 

plants  were  overhauled  and  renovated.  It  is  natural  to  suppose  that  in 
consequence  everything  was  in  excellent  repair — better  than  average. 
As  to  charging  up  current  construction  to  operating,  that  is  something 
that  always  must  be  done  sometime — whether  the  cost  sheets  show  it  or 
not.  There  is  no  great  virtue  in  doing  it  in  this  particular  case  because 
in  this  very  year,  outside  of  what  was  charged  to  operating,  there  was 
spent  on  plant  no  less  than  $820,000  or  5^  cents  per  pound  of  copper 
produced  from  the  company's  own  mines. 

Furthermore,  let  us  consider  the  following.  At  average  prices  for  the 
last  ten  years  (15.4  cents  copper,  57  cents  silver,  and  $20  gold)  the  ore 
for  1908  shows  the  following  values. 

Copper 53.4          Ib.  =  $8.22 

Silver 0.923      oz.  =    0.54 

Gold..  0. 00575  oz.  =    0.115 


Total 8.87  =  57.6  Ib.  copper 

The  costs  for  1908,  the  lowest  on  record,  are  $5.976  per  ton.  This 
gives  10.37  cents  per  pound  for  the  copper,  or  its  equivalent,  extracted. 
With  these  costs,  the  profit  per  pound  is  5  cents  and  we  might  expect  a 
profit,  under  average  conditions,  of  some  $2.80  per  ton  mined  and  treated. 
With  these  comments  the  following  is  quoted  directly  from  the  report. 

THE  CANANEA  CONSOLIDATED  COPPER  COMPANY,  S.  A. 
AUDITOR'S  REPORT 
December  31,  1908 
Earnings 

Total  earnings  on  copper,  gold  and  silver,  and  net  earnings  from  mis- 
cellaneous revenues. $2,427,335 . 79 

Expenditures 
Total  expenditures  account  copper,  gold,  and  silver 1,821,029.85 


Net  profit  for  year $606,305 . 94 

Sundry  expenditures  including  shut-down  costs,  etc 820,446.56 


Deficit  for  the  year  1908 214,140.62 

REPORT  OF  GENERAL  MANAGER 

The  figures  of  production  are  for  the  period  beginning  July  11,  1908, 
when  operations  were  resumed,  to  the  close  of  the  calendar  year.  In 
reading  this  report  I  would  respectfully  refer  you  to  my  report  of  Febru- 
ary 15,  1908. 

Tonnages 

Wet  tons  domestic  ore  treated 295,554 

Wet  tons  custom  ore  treated. .  72,088 


Total 367,642 


340 


THE  COST  OF  MINING 


Ratio  of  concentration,  domestic  ore  milled 3. 12  tons  into  1 

Ratio  of  concentration,  custom  ore  milled 4 . 02  tons  into  1 

Production 

Returnable  fine  copper  in  domestic  bullion 15,679,685  Ib. 

Returnablr  fine  copper  in  bullion  from  custom  ore 2,939,924  Ib. 


Total '. 18,619,609  Ib. 

Silver  in  domestic  bullion 272,651.24  oz. 

Silver  in  bullion  from  custom  ore 175,011.99  oz. 


Total  silver 447,663.23  oz. 

Gold  in  domestic  bullion 1,700.683  oz. 

Gold  in  bullion  from  custom  ore 1,178.150  oz. 


Total  gold 


2,878.833  oz. 


Recovery  from  Ores. — Recovery  from  domestic  ore  and  other  material 
treated  was  as  follows; 

Copper  2.652    per  cent.  Silver  0.923  oz.  Gold  0.00575  oz. 

The  value  of  the  precious  metals  per  ton  of  domestic  copper  produced 
amounted  to  $21.09. 

Development  during  period:  January  1  to  December  31,    1908: 


Shafts 

Winzes  and  raises 

Tunnels,  drifts,  and  crosscuts. 

Total.. 


412.5ft. 
3,550.5ft. 
9,388.0ft. 

13,351.0ft. 


The  Mines. — The  following  statement  covers  the  tonnages  and  costs 
of  mining  at  the  various  mines ; 


Wet  tons 

Total  cost 

Cost  per  wet 
ton 

Puertocitos 

18465  4 

$41,549  68 

$2  250 

Elisa  

40,481  4 

71,580  00 

1.764 

Capote  .... 

15  923  1 

82  088  64 

5  155 

Oversight  

142,824  8 

272,766.63 

1.910 

Veta  Grande  .  . 

91  901  3 

191,992  54 

2  089 

Total  

309,696  0 

659,997.49 

2.131 

The  Cost  of  Mining. — The  cost  of  mining  for  the  total  tonnage 
mined  was  $2.13  per  wet  ton.  For  the  fifteen  months  ending  October 
31,  1907,  it  was  $3.28,  and  for  the  year  1905-1906  it  was  $3.85. 


COPPER  MINES  IN  VARIOUS  DISTRICTS  341 

Great  credit  belongs  to  the  Mining  Department  for  this  showing 
under  most  difficult  conditions.  The  reasons  for  the  decreased  costs 
are  twofold.  First,  the  slicing  and  carving  system  has  been  thoroughly 
learned  and  applied  to  the  various  mines  in  the  modified  forms  which 
the  conditions  demand.  This  has  resulted  in  a  decreased  amount  of 
timber  and  supplies  and  an  increased  efficiency  of  the  men.  The 
second  reason  is  '  that  the  Mining  Department  has  been  entirely 
reorganized  and  the  average  pay  per  employee  has  been  decreased  by 
this  readjustment  very  nearly  20  per  cent.  We  have,  therefore,  a  de- 
creased cost  per  man  and  an  increased  output  per  man.  For  the  period 
in  question  the  output  per  man  has  been  increased  from  1.2  to  1.6  tons, 
and  this  covers  not  only  the  miners  but  the  muckers,  trammers,  black- 
smiths, and  in  fact  every  employee  of  the  mines  up  to  and  including  the 
foremen.  It  is  hard  to  realize  the  difficulties  that  have  been  encountered 
in  accomplishing  this,  but  it  had  to  be  done  and  was  done. 

Departing  from  facts  and  predicting  for  the  future,  I  have  little  doubt  that 
we  will  be  able  to  maintain  and  improve  upon  these  costs  in  spite  of  the  tre- 
mendously increased  amount  of  development  work  we  propose  to  do,  and  we  can 
look  to  continued  decreases  in  mining  costs  rather  than  increases  for  sometime 
to  come;  but  in  saying  this  I  am  keeping  in  mind  certain  capital  expenditures 
which  are  exceedingly  urgent.  This  construction  provides  cheaper  compressed 
air  and  more  electrical  power  at  the  mines.  You  have  authorized  and  we  are 
now  installing  an  air  compressor  of  6000  cu.  ft.  of  free  air  per  minute  capacity  at 
the  power  house  and  will  lay  a  pipe  line  to  four  of  the  mines  and  replace  with  this 
one  machine  eight  uneconomical  small  machines.  Since  the  reverbertory  furnace 
is  generating  an  average  of  over  600  boiler  horse-power  we  have  a  surplus  of 
boilers  at  the  power  house  and  no  new  boilers  are  needed,  and  our  power  house 
condenser  is  abundantly  large  to  take  care  of  this  compressor.  In  addition  to 
this  we  are  now  up  to  the  limit  of  our  electrical  generating  capacity  and  it  is 
essential  that  we  should  put  in  more  power  for  the  use  of  the  mines.  Mr.  John 
Langton,  consulting  engineer,  is  now  making  a  study  and  report  on  our  power 
equipment,  and  is  preparing  specifications  to  be  submitted  to  you.  It  would 
appear  that  with  an  expenditure  of  $57,000  we  can  increase  our  capacity  1000 
kilowatts  and  reduce  the  cost  of  generating  power  per  kilowatt  year  about  15 
per  cent.  If  this  unit  is  put  in  there  is  no  question  but  that  other  capital  expen- 
ditures will  be  required,  because  if  we  can  change  over  our  steam  hoists  of  four 
of  our  shafts  to  electrically  driven  hoists  by  the  addition  of  the  proper  motors  we 
can  abandon  entirely  four  very  expensive  steam  plants.  If  the  program  is  ap- 
proved and  carried  out  it  will  require  a  total  expenditure  of  about  $120,000.  In 
making  this  recommendation  I  have  carefully  considered  the  tremendous  expendi- 
tures that  we  have  had  to  make  and  am  still  keeping  in  mind  the  rule  of  recom- 
mending only  expenditures  that  will  pay  for  themselves  in  one  year's  operations. 

In  the  first  edition  further  quotations  were  made  from  Dr.  Ricketts'  re- 
port for  1908  but  for  present  purposes  it  seems  desirable  to  substitute 


342 


THE  COST  OF  MINING 


PRODUCTION  AND  PROFITS  OP  MINES  OWNED  AND  CONTROLLED  BY  GREENE-CANANEA 
COPPER  Co.,  INCLUDING  CUSTOM  ORES. 


Copper,  Ibs. 

Silver,  oz. 

I 

Gold,  oz.         Price  copper,  cts. 

Profit 

1911 

44,897,466 

1,295,297 

5,892 

12.886 

$1,318,472 

1912            48,157,847 

1,457,308 

7,197 

16.019 

2,580,750 

1913 

44,480,514 

1,497,938 

8,021 

15  1 

2,344,592 

1914 

21,858,920 

907,310 

6,054 

13.838 

638,955 

1915 

16,335,081 

635,997 

3,773 

19.566 

1,410,543 

1916 

62,250,067 

1,975,734 

11,692 

25.541 

7,673,184 

1917 

30,496,487 

891,226 

5,754 

27.038 

2,497,888 

268,476,382 

8,660,810 

48,383 

18,464,384 

I 

an  outline  of  the  subsequent  history  of  the  concern.  Several  points 
in  this  experience  are  worth  attention;  for  instance,  the  correctness  of 
Dr.  Ricketts'  anticipation  of  being  able  to  maintain  the  improved  operat- 
ing results,  the  difficulty  of  keeping  up  satisfactory  industrial  enterprises 
in  a  county  of  unstable  politics,  and  the  comparison  of  Mexican  labor 
with  American  labor. 

Up  to  the  end  of  1915,  that  is  before  the  war  introduced  any  change 
beyond  peace  time  precedent,  the  profits  aggregated  about  $8,300,000 
from  a  total  of  about  175,700,000  pounds  copper,  about  4%  cents  a  pound. 
But  it  appears  that  some  of  the  metals  reported  was  from  custom  ores, 
from  which  the  profit  was  presumably  small.  The  exact  amount  of  such 
metals  is  not  entirely  clear  but  it  appears  to  be  about  28,000,000  pounds 
copper,  for  the  five  years  1911-15  inclusive.  The  total  amount  of  copper 
therefore,  from  which  the  overwhelming  preponderance  of  the  profits  must 
have  come  was  only  about  148,000,000  pounds,  with  5,000,000  ounces 
silver  and  about  27,000  ounces  gold.  Under  the  prices  then  prevailing 
the  gold  and  silver  averaged  about  2  cts.  per  pound  of  copper,  making 
the  total  value  expressed  in  that  metal  about  18  cents.  The  average 
profits  were  about  5j^  cents,  equal  to  about  a  third  of  the  recovered 
value,  leaving  say  12^  cents  per  pound  for  cost. 

The  dividends  paid  in  the  period  1911-15  from  the  above  stated 
earnings,  of  $8,300,000  were  about  $5,885,000,  about  70  per  cent,  of  the 
earnings,  but  the  difference  is  quite  accounted  for  by  the  growth  of 
$2,124,000  in  current  assets  in  four  out  of  the  five  years.  We  may 
therefore  conclude  that  the  profits  reported  are  a  real  excess  of  receipts 
over  expenditures. 

The  unstable  political  condition  of  Mexico  is  pictured  in  every  report; 
not  so  much  by  description  as  by  the  bald  references  to  repeated  shut- 
downs, resulting  in  fluctuations  of  output  between  16  and  62  million 
pounds.  That  the  costs  under  such  conditions  should  remain  so  con- 
stant as  is  shown  by  the  following  record  is  not  a  little  remarkable. 


COPPER  MINES  IN  VARIOUS  DISTRICTS 


343 


COSTS  OF  GREENE-CANANEA  OPERATIONS  FOR  A  PERIOD  OF  YEARS 


Tons 

Mining 

Reduction 

Total 

1905-6 

947,977 

$10.21 

1906-7 

1,305,291 

7.625 

1908-6  mos. 

295,554 



5.976 

1909 

835,929 

5.459 

1910 

792,856 



5.765 

1911 

741,873 

$2.52 

5.257 

1912 

895,406 

2.927 

$2.848 

5.925 

1913 

757,460 

2.890 

2.546 

6.73 

1914 

439,587 

3.09 

2.678 

7.02 

1915 

312,196 

2.46 

2.715 

7.82 

1916 

1,238,151 

2.61 

2.395 

7.95 

There  is  reason  to  suppose  that  the  totals  reported  for  1912  and  before 
cover  not  quite  the  same  items  as  those  reported  later;  perhaps  they 
cover  only  operating  costs  while  the  later  ones  cover  also  general  ex- 
penses of  all  kinds. 

The  reduction  of  the  ores  is  interesting.  The  grand  average  yields 
about  45  pounds  copper,  1.4  oz.  silver  and  16  cents  gold,  per  ton.  In 
1916  about  70  per  cent,  was  smelted  direct,  the  remainder  concentrated, 
chiefly  by  flotation.  Concentration  cost,  in  1916,  84  cents  a  ton.  The 
cost  of  operating  the  reverberatory  furnaces,  per  ton  of  charge,  was 
$1.67.  We  may  suppose  that  the  total  expense  of  treatment  per  ton  of 
new  ore  before  the  war  was  divided  somewhat  as  follows : 

Concentrating  30%  at  84  cts $0. 25 

Converting  45  Ibs.  at  Y2  ct 0 . 23 

Refining  and  marketing  about 0 . 70 

Roasting  and  smelting 2 . 30 

Total  about  $3.48,  equal  to  about  7^  cents  per  pound  of  copper 
alone,  and  to  about  6  cents  per  pound  if  we  convert  the  precious  metals 
into  their  equivalent  in  copper. 

The  cost  of  mining  is  exhibited  in  the  table  and  averaged  perhaps 
$2.80  per  ton.  A  little  over  15  tons  is  mined  per  foot  of  development. 
The  cost  of  development  is  not  always  reported  but  for  1913  it  figures 
out  about  $8.00  per  foot. 

The  number  of  men  employed  in  1916,  which  was  a  full  year  of  operat- 
ing, was  3643  Mexicans  and  188  foreigners,  a  total  of  3831.  The  output 
per  man  per  year  was  about  15,000  pounds  of  copper  alone  and  about 
17,000  pounds  if  we  convert  the  precious  metals  into  their  equivalent  in 
copper.  This  output  per  man  is  less  than  that  at  any  of  the  neighboring 
districts  in  the  United  States,  as  will  be  seen  for  the  figures  given  for 
those  districts.  About  one  ton  was  mined,  concentrated  and  smelted 
per  man  per  day;  and  the  total  cost  per  man  was  about  $5.00  a  day. 


344  THE  COST  OF  MINING 

WALLAROO  AND  MOONTA 

An  example  of  conditions  and  costs  similar  to  those  of  Butte  is 
furnished  on  the  other  side  of  the  world  by  the  Wallaroo  and  Moonta 
mines  of  South  Australia.  These  mines  have  not  been  described  with 
the  definiteness  one  would  like;  but  in  a  general  way  the  first  is  a  group 
of  fissure  veins  in  metamorphic  schist  and  the  second  a  similar  group  of 
fissures  in  porphyry.  The  production  of  the  district  has  not  been  so  large 
as  that  of  Butte,  and  the  mineralization  is  less  intense.  The  mining  costs 
are  somewhat  higher  because  exploration  is  more  expensive,  but  in  other 
respects  the  parallel  with  the  great  Montana  camp  is  close  and  interesting. 

These  mines  are  described  by  the  general  manager,  H.  Lipson  Han- 
cock (son  of  the  inventor  of  the  Hancock  jig)  in  a  pamphlet  issued  at 
Wallaroo,  in  November,  1907.  The  mines  were  discovered  in  1860.  In 
forth-seven  years  these  mines  have  raised  and  extracted  as  follows: 

Dressed  ore  and  concentrates 1,670,360  tons. 

Copper,  averaging  15  per  cent,  in  ore 248,993  tons. 

Total  value £13,944,445 

Total  cost £11,285,809 

Total  dividends £  2,018,254 

Average  cost  per  ton  of  concentrates £6   15s.  2d. 

"The  dressed  ore  of  Wallaroo,"  says  Mr.  Hancock,  "  has  through- 
out recent  times  averaged  about  11  per  cent.;  that  of  the  Moonta  about 
20  per  cent,  of  copper,  excepting  that  in  later  years  it  has  been  2  or  3 
per  cent,  lower.  For  a  long  time  the  vein  stuff  as  raised  to  surface  at 
both  properties  has  contained  on  the  average  from  3  to  4  per  cent, 
copper." 

Port  Wallaroo,  the  smelting  point,  is  situated  on  the  west  side  of  the 
York  peninsula.  The  Moonta  mines  are  twelve  miles  south  and  the 
Wallaroo  mines  six  miles  east  of  the  port.  The  ore  comes  from  about  ten 
diferent  veins  in  all.  At  the  Wallaroo  mines  there  are  three  large  veins 
and  several  smaller  ones  in  metamorphic  mica  schist  supposed  to  be  of 
Cambrian  age. 

Most  of  the  work  has  been  confined  to  one  lode  along  which  were  oc- 
currences of  copper  near  the  surface  for  a  length  of  10,000  ft.,  but  at  the 
the  depth  of  2000  ft.  the  length  of  workable  ground  has  contracted  to  2500 
ft.  On  the  other  veins  the  ores  did  not  prove  remunerative  below  the 
1000-ft.  level.  At  Moonta  there  are  five  veins  of  which  only  one  is 
holding  out  below  the  2000-ft.  level.  In  both  groups  the  copper  is  largely 
in  the  form  of  chalcopyrite  mixed  with  iron  pyrite.  The  ore  occurs 
in  rather  short  shoots,  often  where  the  vein  is  intersected  by  cross- 
courses. 

The  high  cost  for  mining  is  easily  explained.  There  are  more  than 
eighty  miles  of  development  openings,  including  shafts,  drifts,  etc.  This 


COPPER  MINES  IN  VARIOUS  DISTRICTS 


345 


work  would  probably  cost  at  least  $12  a  foot,  or  $5,000,000.  This 
accounts  for  $3  per  ton  of  dressed  ore,  or  approximately  75  cents  per  ton 
of  vein  stuff  hoisted.  The  actual  stoping,  including  hoisting,  pumping, 
etc.,  costs  about  $3.50  per  ton.  The  ground  is  soft  like  that  of  Butte, 
probably  softer,  requiring  close  timbering  as  well  as  close  filling.  The 
granulated  slag  from  the  smelter  is  used  for  filling. 

Sorting  and  milling  in  1903  cost  75  cents  at  the  Wallaroo  and  $1.25 
at  the  Moonta.  These  costs  seem  high,  but  the  work  is  done  with 
extreme  care. 

In  terms  of  short  tons  and  American  money  I  find  that  the  average 
cost  of  mining,  concentrating,  and  smelting  a  ton  of  concentrates  for 
the  whole  life  of  the  mine  has  been  $32.90.  In  recent  years  the  cost  has 
exceeded  this  by  about  $2  per  ton.  The  increased  cost  is  to  be  explained 
by  the  increased  depth  and  a  certain  deterioration  of  the  mines. 

The  accompanying  table  gives  the  cost  of  the  complete  operations 
for  six  out  of  the  last  ten  years.  The  reports  are  excellent. 

COSTS  OF  OPERATION  AT  WALLAROO  AND  MOONTA  FOR  Six  YEARS 


1,176,000  tons    292,889  tons 
crude  concentrates 


General  expense. 


Mining  and  milling. 


Smelting 


Interest  and  discount $0 . 07 

Adelaide  office 0.07 

Special  funds  for  employees 0 . 04 

Depreciation  and  redemption 0 . 40 

Wages  and  contracts 4 . 20 

Machinery  and  materials 0 . 55 

Fuel 0.44 

Buildings 0.04 

Water  supply 0 . 04 

General  and  miscellaneous 0.41 

Freight  on  concentrates 

Wages 

Machinery  and  supplies 

Fuel  and  flux 

Buildings  and  improvements 

General  and  miscellaneous 

Shipping  copper 


Total 


$0.58         $2.33 


$5.68       $22.81 


$0.52 
3.73 
2.33 

$2 . 37  \  3 . 02 
0.15 
0.28 
0.49 

$8.63     '$34.66 


MINES  ON  THE  OLD  DOMINION  LODE,  AT  GLOBE,  ARIZONA 

The  following  remarks  from  the  first  edition  are  retained,  with  a  few 
modifications  to  remove  some  misconception. 


OLD  DOMINION  COPPER  MINING  AND  SMELTING  COMPANY 

This  famous  property  has  been  working  for  many  years  on  a  fault 
fissure  of  rather  complex  geological  relations  in  the  Globe  copper  district 
of  Arizona.  It  has  not  published  any  detailed  reports  that  have  come  to 


346 


THE  COST  OF  MINING 


my  attention  prior  to  the  one  for  the  year  1908,  which  gives  some  in- 
formation about  the  two  preceding  years.  The  information  is  exceedingly 
interesting  for  the  additional  light  it  throws  on  the  problem  of  copper 
mining  on  fissure  veins.  It  belongs  to  the  same  class  of  mines  as  those  of 
Butte  and  the  Wallaroo  and  Moonta. 


In 


PRODUCTION  o*  COPPER — INCLUDING  CUSTOM  ORE 

1905 .  15.103,955 

1906 16,653,225 

1907 23,377,841 

1908 30,308,223 


Four  years 85,443,244 

The  silver  and  gold  with  the  ore  are  so  small  in  amount  as  to  equal  in 
value  less  than  2  per  cent,  of  the  copper. 

The  yield  of  copper  was  2.83  per  cent,  in  1906,  3.88  per  cent,  in  1907, 
and  5.15  per  cent,  in  1908. 

Development  Work. — For  three  years  1734  ft.  of  shaft  sinking  and 
55,261  ft.  of  drifts,  winzes,  and  raises,  a  total  of  56,995  ft.,  were  done  on 
the  property.  It  is  not  stated  that  the  ore  reserves  were  greatly  increased 
by  this  work,  so  that  we  are  led  to  calculate  that  each  foot  of  develop- 
ment opens  up  a  little  over  14  tons  of  ore  and  about  1230  Ib.  copper.  The 
cost  of  development  per  foot  can  be  inferred.  It  is  $15.70  per  foot. 
The  cost  of  shaft  sinking  must  be  high,  owing  to  the  considerable  amount 
of  water.  If  the  drifts,  raises,  and  winzes  average  $12  a  foot,  the  shaft 
would  cost  about  $125  a  foot  The  development  costs  $1.90  per  ton 
mined  and  2.14  cents  per  pound  copper. 

MINING  COSTS 


. 

1905 

1906 

1907 

1908 

Development  .  .  . 

$0  8792 

$1  1436 

$0  9853 

$1  1571 

Pumping.  . 

0  5354 

0  5470 

0  4331 

0  6356 

Mining  (from  stopes  to  surface)  

4.2514 

4.4929 

4.9152 

4  .  5449 

Total  

$5  666 

$6  1335 

$6  3336 

$6  3336 

Concentrating. — In  1908  about  half  the  ore  was  concentrated.  This 
ore  ran  3.036  per  cent,  copper  and  3.019  tons  were  put  into  1  with  as 
extraction  of  82.5  per  cent.  Hence  we  may  conclude  that  the  concentrate 
ran  7.5  per  cent,  copper. 

Total  Operating  Results.— It  appears  that  in  1908  the  total  cost  at 
Globe  for  mining,  concentrating,  and  smelting,  deducting  profit  from 
custom  ores,  was  $3,108,351.  The  tonnage  mined  is  given  at  225,227 


COPPER  MINES  IN  VARIOUS  DISTRICTS  347 

tons  dry,  with  a  yield  of  105  Ib.  per  ton.  This  ore  would  only  yield  23,- 
600,000  Ib.  The  total  amount  of  copper  produced  was  30,300,000  pounds, 
the  remainder  custom  ores.  On  this  basis  we  get  the  following: 

225,227  tons  mined  at  $6 . 3336  =  $1,427,383 . 83 

7  | Concentrated  and  smelted  at  5.703     =     1,680,968. 

Z94,  /5l  |  Refined  and  marketed  at  1 . 590     =       471,597 . 


$13.6266  =  $3,579,948.83 

These  are  the  best  costs  I  can  make  out  of  this  report.  If  the  ore 
contains  105  Ib.  copper  equivalent  per  ton,  then  the  cost  per  pound  is  13 
cents. 

These  conclusions  are  borne  out  by  the  more  extended  history  of  the 
company  which  is  now  available.  It  is  probable  that  in  its  whole  history 
of  nearly  40  years  this  company  has  produced  about  500,000,000  pounds 
of  copper. 

From  1905  to  1915  inclusive,  the  yield  was  probably  about  220,000,000 
pounds  and  the  dividends  about  $7,400,000,  equal  to  3.4  cents  a  pound. 
The  costs  must  have  been  about  12  cents,  about  $10.80  cents  a  ton. 
The  ore  has  seldom  risen  much  above  5  per  cent,  in  grade  and  often  falls 
below  it.  In  1917  it  averaged  4.97  per  cent,  in  1918,  4.52  per  cent. 

Since  1908  the  proportion  of  development  work  has  been  increased  to 
1  foot  for  every  10  tons  extracted.  Heavy  pumping  and  close  timbering 
are  required.  Under  these  circumstances  it  is  doutful  if  mining  costs 
ever  got  much  below  $5.50  a  ton. 

MINES  EAST  OF  THE  OLD  DOMINION 

So  far  as  I  can  gather  the  Old  Dominion  vein  is  not  a  simple  or  un- 
mistakable fissure,  but  is  an  assemblage  of  branching  fissures,  each  of 
which  is  a  fault  of  rupture  of  the  rocks,  along  which  the  opposite  rock 
masses  have  moved  more  or  less.  Each  intersecting  fissure  therefore  is 
in  itself  a  plane  of  adjustment  and  carries  with  it  some  more  or  less 
important  change  in  the  characteristics  of  any  other  vein  that  it  meets. 
Thus  for  instance,  the  walls  of  the  main  fissure  at  the  Old  Dominion 
mine  have  moved  past  each  other  about  1100  feet,  but  going  eastward 
this  movement  has  been  so  distributed  among  branch  fissures  that  by 
the  time  the  Iron  Cap  is  reached  the  movement  between  the  walls  is 
only  300  to  350  feet.  It  seems  probable  that  other  branches  may  have 
taken  up  a  larger  part  of  the  movement  and  might  be  argued  to  be  "the" 
Old  Dominion  vein.  The  principal  claim  for  the  Iron  Cap  to  that  dis- 
tinction is  that  it  contains  large  bodies  of  good  ore  and  lies  in  the  same 
general  course  as  the  more  pronounced  and  more  valuable  parts  of  the 
Old  Dominion. 


348 


THE  COST  OF  MINING 


ARIZONA  COMMERCIAL 

The  total  productive  length  along  the  Old  Dominion  lode  or  zone,  is 
about  2^2  miles.  The  Arizona  Commercial  lies  immediately  east  of  the 
Old  Dominion. 

It  has  shipped  in  the  four  years  1915-1918  inclusive,  195,743  dry  tons 
of  copper  ore  and  report  that  they  have  developed  "probably  upward  of 
600,000  tons,  averaging  more  than  five  per  cent,  copper."  This  would 
give  that  company  a  total  production,  mined  and  unmined,  of  something 
over  600,000  tons,  which  would  yield  a  total  of  about  68,000,000  pounds 
copper.  Since  this  property  is  only  1740  feet  long,  these  figures  indicate 
a  production  of  more  than  450  tons  of  ore  and  nearly  40,000  pounds  of 
copper  per  running  foot. 

ARIZONA  COMMERCIAL  MINING  Co. 


Year 

Dry  tons 

Per  cent, 
copper 

Development, 
feet 

Cost 
including 
Boston 
office 

Cost 
pumping 

Cost 
without 
pumping 

Cost  per  ton 
without 
pumping 

1915 

44,333 

4.872 

4,326 

$227,638 

$35,609 

$192,029 

$  4.33 

1916 

48,890 

5.028 

4,442 

339,578 

49,689 

289,889 

5.93 

1917 

39,703 

6.15 

3,545 

353,771 

69,519 

284,252 

7.16 

1918 

62,797 

5.87 

5,729  est. 

712,000 

70,000 

642,000 

10.  20  est. 

195,943 

19,042 

The  cost  for  mining  in  1918  is  not  reported  as  in  the  preceding  years 
and  I  have  been  compelled  to  estimate  it  by  trying  to  dissociate  it  from 
the  smelting  costs  with  which  it  is  lumped.  I  cannot  vouch  for  the  ac- 
curacy of  the  figures  thus  obtained,  but  they  fit  in  pretty  well  with  general 
experience.  They  indicate  a  rise  of  cost  of  40  per  cent,  in  1918  over  1917. 


CHAPTER  XIX 
LEAD 

LEAD  MINING  IN  GENERAL — DIVISION  INTO  THREE  ECONOMIC  TYPES — DISSEMINATED 
ORES — FISSURE  VEINS — ORES  RESULTING  FROM  CONCENTRATION  OP  MIXED 
SULPHIDES — PRODUCTION  OP  LEAD  BY  STATES — WORLD'S  PRODUCTION — SMELT- 
ING PLANTS. 

Lead  Mining. — While  a  geological  description  of  lead  deposits  would 
be  rather  tedious  and  difficult  to  make,  a  classification  of  lead  ores  from 
an  economic  standpoint  is  easy.  As  in  the  case  of  copper  they  fall 
naturally  into  three  groups. 

1.  Disseminated  sulphide  ores  that  can  be  concentrated  in  a   high 
ratio,  i.e.,  where  far  the  greater  part  of  the  material  mined  can  be  dis- 
carded mechanically  as  waste,  leaving  only  3  to  10  per  cent,  to  be  smelted 

2.  Fissure  vein  deposits,  almost  always  carrying  an  important  amount 
of  silver,  and  often  gold  and  copper.     Such  ores  concentrate  in  a  moderate 
ratio.     From  10  to  35  per  cent,  must  be  smelted. 

3.  High-grade  bunches  of  carbonates  or  sulphides  already  concentrated 
by  nature  so  that  the  ore  must  be  smelted  as  mined,  the  only  rejection 
of  waste  being  by  hand  sorting. 

Without  going  much  into  detail  it  will  be  interesting  to  pursue  the 
characteristics  of  these  ores  a  little  further. 

1.  In  the  United  States  practically  the  only  disseminated  ores  are 
those  of  the  Mississippi  Valley  region,  principally  in  Missouri.  They  have 
been  deposited  by  waters  circulated  from  the  surface  downward,  and  de- 
positing lead  ores  in  the  beds  of  limestone  most  favorable,  through  their 
chemical  or  mechanical  structure,  for  the  reception  of  such  ingredients. 
These  deposits  are  invariably  sharply  limited  in  their  extension  downward. 
They  are  confined  to  certain  beds  that  the  geologist  can  soon  recognize. 
The  horizontal  extent  may  be  very  great,  sufficient  to  give  these  deposits, 
great  importance  and  a  long  prospective  life.  The  southeast  Missouri 
district  is  by  a  good  margin  the  most  productive  in  the  world.  Here 
the  mining  conditions  are  closely  parallel  to  the  copper  districts  of  Lake 
Superior  and  to  the  newly  developed  disseminated  copper  ores  of  the 
West.  This  holds  good  as  to  costs.  As  in  the  case  of  copper  ores  of 
this  class,  the  total  cost  of  production  per  ton  of  ore  was  before  the  war 
between  $2  and  $3.  The  lead  ores  of  this  class  are  about  three  times  as 
rich  as  the  copper  ores,  hence  the  cost  of  lead  is  only  one-third  the  cost 
of  the  copper;  a  fact  that,  as  a  corollary,  holds  good  with  regard  to  the 
selling  price  of  the  metal. 

349 


350  THE  COST  OF  MINING 

2.  The  fissure  vein  deposits  are  for  the  most  part  original  deposits 
caused  by  hot  waters  ascending  along  fissures  from  great  depths.  The 
fissures  of  the  Coeur  d'Alenes  were  not  simply  open  cracks  in  the  rock, 
they  were  more  apt  to  be  crushed  zones  where  the  circulation  of  water 
was  often  brought  to  a  stop  by  the  infiltration  of  minerals  and  again 
started  by  renewed  fissuring.  There  were  thus  several  distinct  periods 
of  mineralization.  Sometimes  the  successive  mineralizations  were  of 
the  same  character,  sometimes  of  quite  diverse  characters. 

In  the  case  of  the  principal  deposits  of  the  Cceur  d'Alenes  the  lead 
ores  were  deposited  at  the  expense  of,  and  replacing,  certain  iron  carbonate 
that  had  been  deposited  earlier.  The  iron  carbonates  had  often  replaced 
large  quantities  of  the  original  quart zite  rock  in  the  fissure  zone.  After 
the  lead  had  been  deposited  there  was  a  recurrence  of  deposition  of  the 
iron  carbonates  which  attacked  some  of  the  lead  sulphides.  All  these 
complicated  processes  were  of  deep-seated  origin.  After  the  real  minerali- 
zation had  all  ceased  the  orebodies  were  exposed  to  the  effects  of  the 
circulation  of  surface  waters.  As  the  surface  was  slowly  eroded  away  the 
air-carrying  waters  from  the  surface  reached  gradually  deeper  and  deeper 
into  the  original  deposits,  attacking  and  rearranging  the  minerals  enrich- 
ing some  parts  of  the  orebodies  and  impoverishing  other  parts. 

In  the  Cceur  d'Alene  mines,  the  effect  of  the  last  process  upon  the  value 
of  the  ores  was  not  very  great.  The  oxidation  did  not  affect  the  veins 
more  than  a  few  hundred  feet  down  from  the  outcrops.  The  far  greater 
portion  of  these  deposits  is  original,  the  surface  action  has  nothing  to  do 
with  the  depth  limit  of  profitable  mining.  That  limit  is  quite  unknown. 
Wherever  the  end  of  an  orebody  has  been  found  the  geological  reason  for 
it  has  either  been  that  the  fissure  entered  a  different  and  less  favorable 
rock  formation,  or  else  the  reason  for  termination  is  obscure.  Certain 
formations  of  quartzite  are  now  recognized  as  being  far  more  favorable 
for  the  deposition  of  lead  ores  than  others.  With  this  sole  limitation 
the  Cceur  d'Alene  veins  promise  to  be  productive  to  very  great  depths.1 

Other  great  lead-bearing  fissures  have  a  somewhat  different  character. 
The  great  Broken  Hill  lode  in  Australia,  which  has  produced  more  than 
$325,000,000  in  gross  value  of  lead  and  silver,  from  which  over  $60,000,000 
has  been  paid  in  dividends,  is  mineralogically  as  much  of  a  zinc  deposit 
as  a  lead  deposit,  though  the  proportion  of  silver  is  nearly  the  same  as  in 
the  Cceur  d'Alenes.  At  Broken  Hill  the  effect  of  surface  waters  in  re- 
arranging the  minerals  was  of  capital  importance.  Although  the  original 
ores  have  been  proved  to  be  payable,  the  metallurgical  difficulties  en- 
countered upon  passing  from  the  oxidized  zone  into  the  unaltered  sulphides 
were  so  serious  as  to  bring  the  development  of  the  mines  for  a  time  almost 
to  a  standstill.  A  brief  further  description  may  be  interesting. 

The  Broken  Hill  lode  is  one  of  the  greatest  mineral  deposits  of  any 

1  This  was  written  in  1909  and  is  retained  for  its  historical  interest.  See  chapter 
on  Silver-Lead  Mining. 


LEAD  351 

kind  in  the  world.  It  is  certainly  the  greatest  of  its  class.  It  is  some 
2J^  miles  in  length  and  contains  ore  shoots  as  much  as  300  ft.  thick  of 
massive  ore  averaging  some  35  per  cent,  in  lead  and  zinc  sulphides.  The 
geological  relations  of  the  mass  are  somewhat  obscure.  At  one  time  it 
was  thought  to  be  conclusively  proved  that  it  was  a  "saddle  reef/7  i.e., 
a  bed  folded  back  upon  itself  so  as  to  form  a  deep  trough,  approximately 
lenticular  in  cross-section  and  plunging  to  the  south.  I  believe  doubt 
has  been  thrown  on  this  explanation,  which  seems  a  little  improbable. 
At  any  rate  it  is  a  huge,  highly  mineralized  mass,  acting  in  all  essential 
respects  like  a  fissure  vein,  in  a  region  where  the  rocks  are  highly  meta- 
morphosed and  compressed. 

The  original  minerals  seem  to  be  in  the  proportion  of  lead  sulphides, 
about  15  per  cent.,  zinc  sulphides  about  20  per  cent.,  with  a  gangue  of 
quartz,  calcite,  garnet,  and  rhodonite.  The  metallic  assays  are  lead  and 
zinc,  each  about  13  per  cent.,  and  silver  5  to  10  oz.  per  ton.  In  the  lower 
parts  of  the  mine  the  ore  forms  a  hard  compact  mass,  containing  no 
waste,  in  which  the  valuable  minerals  are  closely  knit  together  with  the 
gangue,  making  the  concentration  and  separation  of  the  metals  difficult, 
expensive,  and  unsatisfactory.  But  the  surface  waters,  to  a  depth  of 
from  250  to  400  ft.,  had  removed  the  zinc  and  left  a  bonanza  orebody 
containing  33  per  cent,  lead  and  20  to  30  oz.  silver;  an  ore  of  easy  metal- 
lurgical treatment  accessible  to  mining  in  an  open  pit.  At  the  surface, 
therefore,  the  realization  of  the  values  presented  no  difficulties  even  in  the 
Australian  desert;  but  when  it  suddenly  became  necessary  to  separate  a 
lessened  percentage  of  lead  from  an  obstinate  accompaniment  of  zinc 
(for  the  two  metals  cannot  be  smelted  together),  facing  at  the  same  time 
a  loss  of  half  the  silver,  in  a  region  where  water  was  scarce  and  everything 
expensive  it  required  a  good  part  of  the  money  earned  from  the  surface 
bonanza  to  solve  the  problem.  It  required  nothing  short  of  discarding 
the  old  smelting  plants  altogether  and  beginning  anew;  worse  than  that, 
experimenting  with  new  processes.  The  outcome  has  been  that  the  orig- 
inal ores  have  proved  to  be  payable,  but  to  a  diminished  degree.  Lead 
can  no  longer  be  produced  so  cheaply,  while  the  great  masses  of  zinc  ore, 
formerly  discarded,  have  become  valuable  and  a  formidable  factor  in  the 
zinc  market.  Under  no  circumstances,  however,  can  the  original  ores 
become  anything  like  so  valuable  as  the  altered  surface  ores  (except, 
indeed,  through  their  much  greater  volume). 

Lead  ores  from  such  fissure  veins  as  the  above  bear  a  close  economic 
as  well  as  natural  resemblance  to  the  copper  ores  from  fissure  veins.  It 
will  be  noted  that  the  costs  in  the  Coeur  d'Alenes  and  at  Broken  Hill, 
per  ton,  are  not  far  from  those  of  the  copper  mines  of  Butte,  of  Wallaroo, 
and  Moonta,  and  of  the  Old  Dominion  at  Globe,  Arizona.  The  total 
cost  for  the  whole  process  is  from  $6  to  $10  per  ton.  As  noted  in  the  case 
of  disseminated  ores,  the  lead  is  about  three  times  as  abundant  as  copper, 
justifying  prices  inversely  proportional. 


352  THE  COST  OF  MINING 

3.  The  third  class  of  lead  ores,  simply  smelting  ores,  are  nearly  always 
of  an  origin  similiar  to  the  surface  ores,  just  described,  of  Broken  Hill. 
They  are  usually  the  result  of  the  reconcentration  of  mixed  sulphides  of 
iron,  zinc,  lead,  and  copper.  It  very  often  happens  that  the  original  ores 
are  quite  unpayable,  owing  either  to  their  low  grade,  or  to  the  fact  that 
their  volume  is  insufficient  to  warrant  the  expensive  installations  of  plant 
necessary  to  work  them.  Lead  ores  of  this  kind  usually  form  an  insignifi- 
cant fraction  of  the  ore  deposits  from  which  they  are  derived,  but  often 
they  are  of  high  grade  both  in  lead  and  silver,  are  near  the  surface,  and 
can  be  mined  profitably  even  in  small  quantities.  For  this  reason  a 
considerable  amount  of  lead  and  silver  is  derived  from  a  multitude  of 
small  shipments  of  this  kind  of  ore,  from  hundreds  of  different  places. 
In  some  few  cases,  such  as  Leadville,  Colorado;  Tintic,  Utah,  and  Park 
City,  Utah,  such  ores  have  been  important  sources  of  lead.  In  those 
camps  the  rich  lead  ores  have  been  the  principal  resource  of  some  of  the 
mines.  A  certain  amount  of  concentrating  ore  is  obtained  with  the  high- 
grade  ore,  but  in  each  case,  if  the  high-grade  ore  were  absent,  the  lower 
grade  ore  would  not  be  payable.  Other  districts  producing  this  type  of 
ore  are  Eureka  and  Pioche,  Nevada;  Aspen  and  Creede,  Colorado,  and 
Santa  Eulalia  in  Mexico. 

I  shall  give  no  very  clean-cut  examples  of  the  cost  of  mining  these 
ores.  Those  of  Park  City  will  give  a  general  idea.  The  cost  per  ton  in 
general  for  this  class  is  high,  certainly  not  less  than  $20  per  ton  for  mining 
and  smelting.  In  Park  City  the  cost  is  between  $10  and  $15  for  mining 
alone,  to  which  must  be  added  for  freight,  smelting,  refining,  and  losses 
from  $20  to  $25  a  ton  more,  making  a  total  of  $30  to  $40  a  ton. 

Ores  of  this  class  bear  a  close  parallel  in  manner  of  occurrence,  methods 
of  exploration,  and  high  costs  to  the  similarly  derived  copper  ores  of  Bisbee, 
Arizona. 

The  above  table  will  show  at  a  glance  the  sources  of  lead  supply  in  the 
United  States  and  their  comparative  importance.  I  propose  in  the 
following  pages  to  give  an  idea  of  the  state  of  the  business  in  Missouri, 
Idaho,  and  Utah.  These  three  states  produce  more  than  80  per  cent, 
of  the  total  for  this  country.  A  chapter  is  added  by  Mr.  W.  R.  Ingalls 
(The  Mineral  Industry,  1908)  on  Silver  Lead  Smelting  in  the  United 
States,  to  show  not  only  the  relations  of  the  Western  mines  to  the  custom 
smelters  of  the  country,  but  also  the  business  results  of  the  American 
Smelting  and  Refining  Company,  by  far  the  largest  factor  in  the  smelting, 
refining,  and  marketing  of  lead  and  precious  metals  in  North  America. 

The  above  table  and  paragraph  are  retained  to  show  by  comparison 
what  changes  in  the  business  and  in  the  production  have  taken  place 
since.  The  following  later  statistics  from  the  reports  of  C.  E.  Siebenthal 
for  the  United  States  Geological  Survey  entitled  "Lead  in  1916 "  bring 
out  some  additional  facts.  It  will  be  noted  particularly  that  the  relative 


LEAD 


353 


production  by  various  states  has  not  changed  materially.  It  is  estimated 
that  up  to  the  end  of  1916  some  12,558,000  tons  of  lead  had  been  produced 
in  this  country,  with  a  value  at  New  York  of  $1,138,000,000,  equal  to 
a  ton  or  4.5  cents  per  pound.  That  for  10  years  1905-1915  inclusive, 


PRODUCTION,   PRICE  PER  POUND,   AND  VALUE  OF  REPINED  LEAD  IN  THE  UNITED 

STATES,  1720-1916. 


Year 

Desilver- 
ized 
lead  a,  b, 
Short  tons 

Soft 
lead  c, 
Short 
tons 

Total  pro- 
duction b, 
Short 
tons 

From  do- 
mestic ores 
and  base 
bullion  6, 
Short  tons 

From 
foreign 
ores, 
Short 
tons 

From 
foreign 
base 
bullion, 
Short 
tons 

Price 
per 
pound 
at   New 
York 

Value 

1720-1905  .... 
1906 

5,251,079 
313,886 
313,588 
295,552 
329,751 
328,954 
331,032 
339,646 
330,593 
383,903 
388,594 
403,619 

2,081,836 
90,860 
99,801 
101,012 
117,158 
141,318 
155,947 
141,248 
131,867 
158,219 
161,461 
167,515 

7,332,915 
404,746 
413,389 
396,564 
446,909 
470,272 
486,979 
480,894 
462,460 
542,122 
550,055 
571,134 

6,032,383 
336,200 
352,381 
311,666 
352,839 
375,402 
391,995 
392,517 
411,878 
512,794 
507,026 
552,228 

1,3 
28,803 
24,041 
11,509 
21,754 
18,065 
10,764 
11,572 
13,223 
7,639 
9,581 
6,085 

00,532 
39,743 
36,967 
73,389 
72,316 
76,805 
84,220 
76,805 
37,359 
21,689 
33,448 
12,821 

$0.057 
0.053 
0.042 
0.043 
0.044 
0.045 
0.045 
0.044 
0.039 
0.047 
0.069 

$634,403,000 
46,141,000 
43,819,000 
33,311,000 
38,434,000 
41,384,000 
43,828,000 
43,280,000 
40,696,000 
42,286,000 
51,705,000 
78,817,000 

1907  . 

1908.    .    . 

1909  
1910  

1911  

1912  
1913  
1914  

1915  
1916 

9,010,197 

3,548,242 

12,558,439 

10,529,309 

2,029,130 

1,138,104,000 

o  Desilverized  soft  lead  is  included;  for  quantity  see  page  841. 
b  Antimonial  lead  is  excluded;  for  quantity  see  page  842. 
c  Desilverized  soft  lead  is  excluded. 


WORLD'S  PRODUCTION  OP  LEAD,  1910-1916,  IN  SHORT  TONS 


Country 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

Australia 

108  907 

109  789 

118  387 

127  867 

107  520 

113  733 

152  762 

Austria-Hungary  

19,290 

21,605 

23,589 

26,565 

Belgium 

44  864 

48  832 

56  438 

55  997 

51  220 

18  485 

17  150 

Canada 

16  535 

11  795 

17  968 

18  849 

18  465 

22  700 

21  000 

France  

22,266 

26,014 

34,282 

30,864 

Germany  .    .    . 

174  604 

181  218 

194  666 

199  627 

Great  Britain  .  .  . 

32  628 

28  660 

32  187 

33  620 

22  248 

17  659 

14  000 

Greece  

18  519 

15,763 

15  983 

20  282 

23  166 

12  986 

10  555 

Italy  

15,983 

18,408 

23,699 

23  920 

22  920 

24  429 

27  200 

Japan  
Mexico  
Russia  

3,858 
133,048 
1,323 

4,630 
137,347 
1,102 

4,960 
132,276 
1,102 

3,968 
68,343 
1,102 

5,111 
31,000 

5,336 
62,000 

12,500 
30,000 

Spain 

211  531 

193  013 

205  79Q 

223  767 

158  207 

192  049 

165  095 

Sweden 

441 

1  213 

1  433 

1  653 

1  564 

2  148 

2  324 

Turkey  in  Asia  

13,999 

13,668 

13,779 

15,322 

Other  countries  a  

17,306 

22,597 

13,448 

6,834 

11,814 

7,750 

12,410 

United  States  (domestic  re- 
fined)   

375,402 

391,995 

392,517 

411  878 

512  794 

507  026 

552  228 

1,210,504 

1,227,649 

1,282,513 

1  270  458 

United  States  percentage  of 
world  production  

31  0 

32  0 

30  6 

32  4 

a  Includes  Burma  only,  1914-1916. 


354 


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LEAD  355 

4,665,000  tons  were  valued  at  $425,000,000,  equal  to  $91.20  per  ton  or 
$4.56  per  pound.  I  assume  that  we  may  argue  that  the  normal  value  of 
lead  mines  should  be  based  on  the  profits  realized  under  this  average 
price. 

The  lead  smelters  of  the  United  States  are  distributed  as  follows: 
California  1,  Colorado  4,  Idaho  1,  Illinois  4,  Indiana  2,  Kansas  1,  Mis- 
souri 5,  Montana  1,  Nebraska  1,  New  Jersey  2,  Pennsylvania  1,  Texas  11, 
Utah  3,  Washington  1,  Total  28. 

Canada  2. 

Mexico  14. 

Total  for  North  America  44  plants. 

Of  the  lead  produced  in  1916  only  72  per  cent,  came  from  straight 
lead  ores,  the  remainder  came  from  zinc-lead  and  copper-lead  ores.  The 
average  output  of  lead  per  smelter  in  the  U.  S.  seems  to  be  about  20,000 
tons  per  year.  Most  of  them  smelt  other  ores  with  the  lead  but  in  what 
proportion  it  is  hard  to  find  out.  Perhaps  the  average  tonnage  of  ore 
treated  per  smelter  is  100,000  tons  per  year. 

The  average  content  of  crude  lead  ores  mined  in  the  U.  S.  in  1916 
was  only  5.7  per  cent.  Of  this  at  least  90  per  cent,  is  concentrated  before 
smelting.  The  Coeur  d'Alene  concentrates  run  about  45  per  cent,  and 
the  Missouri  concentrates  68  per  cent.  Probably  all  the  lead  con- 
centrates of  the  country  average  over  55  per  cent.  Most  of  the 
straight  smelting  ore  is  produced  in  Utah  and  by  the  numerous  small 
producers  outside  of  Idaho  and  Missouri  where  with  insignificant  excep- 
tions all  the  ore  is  milled. 


CHAPTER  XX 

SOUTHEAST  MISSOURI 

GEOGRAPHY  OP  THE  DISTRICT — POPULATION  GEOLOGIC  HISTORY — EARLY  PALEOZOIF 

GEOGRAPHY THE    SlLURIAN    MOUNTAIN    RANGE    OF    NEW    YORK.       MYSTERY    ON 

THE  ORIGIN  OF  MlSSISSIPI  VALLEY  LEAD  AND  ZINC  DEPOSITS ECONOMIC  SITUATIOC 

— EXPLORATION — MINING — MILLING — SMELTING — PROFITS — COSTS. 

There  is  such  a  thing  as  vogue  or  fashion  even  in  the  most  serious 
affairs  of  life.  Thus  for  instance  it  may  be  taken  for  granted  that  the 
history  of  Rome  is  interesting,  but  that  of  England  dull;  that  it  is  "the 
thing"  to  know  French,  but  not  to  known  German,  or  that  some  dignity 
accrues  to  a  family  that  moves  from  Brooklyn  to  Manhattan,  and  is  lost 
by  a  family  that  moves  from  Manhattan  to  Brooklyn.  This  is  true  of 
mining  districts  in  the  same  way  and  to  the  same  extent  and  it  is  worth 
while  calling  attention  to  the  fact  too,  because  we  miners  have  spent  so 
much  effort  trying  to  describe  our  business  in  terms  of  engineering,  that 
we  may  have  forgotten  that  human  nature  is  just  the  same  in  mining 
camps  as  it  was  in  Imperial  Rome  itself.  Thus  certain  mining  districts 
are  in  a  way  famous  and  fashionable.  The  glamour  of  romance  has  long 
ago  fallen  over  the  golden  streams  of  California  and  a  certain  glory  has 
attached  to  Butte,  Leadville,  Cripple  Creek  and  many  other  such  places. 
Novelists  have  gone  to  them  for  scenery  and  characters;  magazines, 
newspapers  and  even  the  stock  ticker  have  made  them  everyday  words 
to  the  great  public.  A  miner  boasts  of  having  worked  in  the  "Corns to ck" 
the  foreman's  wife  feels  prestige  when  she  tells  her  guests  at  the  table  that 
"we  come  from  Butte." 

No  such  mantle  of  fame  has  ever  been  enjoyed  by  the  greatest  of  lead 
mining  district,  Southeast  Missouri.  I  have  known  ladies  who  had 
gone  there  from  theWest  because  their  husbands  had  found  employment, 
to  suffer  agonies  from  the  depression  of  the  imagination  due  to  the  general 
acceptance  of  its  commonplaceness.  Arithmetic  is  not  a  secure  defense 
against  public  opinion  and  the  statistics  of  Flat  River  are  not  much 
comfort  to  souls  that  pine  for  the  glories  of  Canyon  Creek.  I  remember 
being  amazed  to  find  that  children  could  be  homesick  for  Flat  River. 
But  positive  observation  convinced  me  that  they  not  only  could  be  but 
were,  and  it  was  only  by  calling  to  mind  the  ancient  proverb  "de  gustibus 
non  disputandum  est"  and  Polonius'  sage  remark  that  "there's  nothing 
either  good  or  bad  but  thinking  makes  it  so,"  that  I  was  able  to  find 
precedents  for  such  a  state  of  affairs. 

But  an  unprejudiced  observer  need  have  no  such  difficulties.  The 

356 


SOUTHEAST  MISSOURI 


357 


region  has  beauty  and  a  strong  local  color;  and  even  the  romancer  would 
have  to  dig  no  deeper  there  than  in  Butte  itself  to  find  the  inter-play 
of  hopes,  ambitions,  attachments  and  anxieties  that  give  zest  to  the 


story  of  life.  A  very  modern  and  very  obscure  poet  has  even  called  upon 
rhyme  to  picture  the  landscape  of  early  spring  between  Bonne  Terre 
and  Simms'  Mountain  through  the  heart  of  Flat  River. 

"A  patch  of  yellow  field  and  now  a  cedar  glade 
Amidst  the  oak  woods  dressed  in  last  year's  dingy  red, 


358  THE  COST  OF  MINING 

And  by  the  lazy  sun  are  frequently  displayed 

Green  shoots  which  spring  is  rousing  from  their  winter  bed. 

And  from  this  ridge  where  now  I  drive  my  car 

Broad  river  vales  are  pictured  through  the  oak, 

And  yonder,  bluish  highlands  rise  up  dim  and  far 

Through  drawing  haze  and  level  streams  of  smoke. 

And  here's  a  dusty  village  where  stray  pigs  squeal, 

And  chicks  and  children  scatter  as  we  pass; 

Where  bony  curs  rush  out  as  if  to  snap  the  wheel, 

And  sad  faced  hound  dogs  sniff  the  strips  of  grass." 

This  region  is  near  the  eastern  end  of  the  great  low  plateau  of  the 
Ozarks,  which,  although  made  known  to  every  school  boy  as  a  name  in 
the  geography,  is  not  generally  understood.  Some  geologists  have  given 
excellent  descriptions  of  it  but  their  books  are  technical  and  are  read 
mainly  by  a  few  students,  anxious  to  learn  how  to  earn  a  living.  To  the 
farmers  of  the  great  rich  surrounding  plains  of  northern  Missouri,  Kansas 
and  southern  Arkansas,  this  region  is  dimly  known  as  a  poor  country  with 
flinty  hills  peopled  by  exceedingly  queer  "natives"  who  do  not  know  that 
the  civil  war  is  over  yet  and  who  make  a  living  by  some  mysterious  colla- 
boration with  " razor  backs"  (half  wild  hogs),  where  the  hills  on  the  roads 
are  so  steep  that  "you  must  lie  on  your  back  to  see  up  them,"  where  the 
thin  tires  of  the  baling-wire-bound-together  wagons  have  a  way  of  coming 
off  and  wheeling  themselves  uncertainly  away  into  the  brush,  where  wood 
ticks  and  "chiggers"  afford  one  constant  company,  and  where  fever  and 
ague  hold  control  of  the  scanty  river  bottoms.  While  a  part  at  least 
of  this  description  is  intended  to  be  facetious,  it  is  true  in  substance. 

But  it  is  hardly  fair  to  allow  the  Ozarks  to  suffer  too  much  from  the 
jests  of  their  neighbors.  In  many  respects  derision  is  just  the  pot  calling 
the  kettle  black.  It  is  true  that  the  country  is  rather  sterile,  the  ridges 
being  strewn  with  rough  fragments  of  flint;  in  consequence  many  of  the 
farms  and  the  farmers  are  poor;  but  those  rocky  hills  are  a  welcome  relief 
to  the  eye  wearied  by  the  monotony  of  the  plains  where  the  rich  farms 
are,  and  those  poor  farmers  are  of  the  very  stock  that  produced  Abraham 
Lincoln.  The  rocky  roads  are  no  worse  than  the  bottomless  mud  ruts 
of  Illinois;  the  water  in  the  streams  is  often  clear  and  much  fresher  than 
that  of  the  neighboring  plains.  You  will  find  wood  ticks  and  "chiggers" 
just  as  abundantly  near  the  golf  courses  of  fashionable  Long  Island,  where 
by  the  way,  the  scrubby  flint  hills  are  replaced  by  scrubby  and  monoton- 
ous sand  barrens.  Malaria  still  lingers  in  the  swamps  inside  the  world's 
greatest  city  and  mosquitoes  drift  through  the  windows  of  its  sky- 
scraping  hotels.  And  in  the  Jersey  highlands  within  fifty  miles  of  that 
same  metropolis  I  have  heard  of  " natives"  of  pure  and  old  white  Ameri- 
can stock  who  not  only  could  not  read  and  write  but  who  could  not  tell 
the  numbers  on  the  brass  checks  by  which  they  register  their  work  days. 
Some  of  these  products  of  a  proud  and  free  democracy  have  even  condes- 


SOUTHEAST  MISSOURI  359 

cended  to  ask  the  oppressed  Slavs  of  Austria  and  Hungary  to  tell  them 
the  numbers  on  their  pay  checks.  All  this,  be  it  remembered,  within 
walking  distance  of  Princeton,  Columbia  and  Vassar. 

The  poor  soil  of  the  Ozarks  has  retarded  their  development  but 
whenever  one  is  able  to  disregard  or  overcome  that  handicap,  he  will  be 
disposed  to  think  well  of  this  region  as  a  place  of  residence;  far  from 
being  envious  of  his  neighbor  in  Illinois  he  will  plume  himself  on  enjoying 
better  water,  better  drainage,  better  climate  and  infinitely  better  scenery. 
And  we  take  the  point  of  view  of  the  mining  population  of  course  we 
are  not  concerned  primarily  with  the  fertility  of  the  soil.  The  miner 
of  Flat  River  is  in  attractive  natural  surroundings.  He  does  not  enjoy 
the  sight  of  snow  clad  mountains  or  the  impressive  fault  escarpments  of 
the  Cordilleras  but  he  has  green  hills  and  a  pleasing  landscape:  his 
imagination  may  console  itself  for  want  of  the  Continental  Divide 
by  contemplating  the  obverse  of  that  divide  for  he  is  only  twenty-five 
miles  from  the  Mississippi  River.  Moreover  he  is  in  the  very  heart  of  the 
riches  of  the  great  central  valley,  only  sixty  miles  south  of  its  metropolis. 
He  does  not  have  to  go  far  to  find  other  miners  and  mineral  products. 
Barely  fifty  miles  to  the  east  are  the  coal  fields  of  Illinois,  three  hundred 
miles  west  are  the  zinc  and  lead  fields  of  Southwest  Missouri,  three 
hundred  miles  north  are  the  zinc  fields  of  Wisconsin,  six  hundred  miles 
north  the  copper  and  iron  fields  of  Lake  Superior,  six  hundred  miles  east 
the  wonderful  coal  fields  and  smelting  plants  of  Pennsylvania  and  West 
Viriginia  and  the  zinc  mines  of  Tennessee;  six  hundred  miles  southeast 
are  the  coal  and  iron  fields  of  Birmingham ;  and  at  lesser  distances  on  all 
sides  are  the  oil  and  gas  wells  of  Illinois,  Kansas,  Oklahoma  and  Arkansas. 
It  is  true  that  no  direct  roads  or  common  interests  have  seemed  to  lead 
him  to  exchange  frequent  visits  with  these  neighbors,  but  that  is  a 
privilege  that  is  wide  open  to  him,  which  with  his  expanding  opportunities 
and  vision  he  may  yet  take  advantage  of.  It  is  a  fact  that  many  a 
common  miner  of  Flat  River  is  able  to  take  his  family  to  visit  the  circus 
in  St.  Louis  and  return  the  same  day  in  his  own  automobile. 

Before  going  into  the  human  history  of  this  region  let  us  see  if  we 
cannot  get  some  picture  of  its  natural  history. 

Most  people  would  have  no  difficulty  in  understanding  the  salient 
features  of  geological  history  if  they  had  an  opportunity  to  observe  the 
facts  over  a  wide  enough  area.  This  opportunity  however,  is  denied 
practically  to  all  who  do  not  make  geology  a  profession.  But  the  miner 
is  pre-eminently  a  geological  animal  who  is  altering  the  arrangements 
of  nature:  or,  to  put  it  another  way,  and  perhaps  more  correctly,  he 
is  rapidly  becoming  an  important  factor  in  the  development  of  the  earth's 
crust.  To  such  an  animal  gifted  with  intelligence  and  desire  to  know  the 
effect  of  what  he  is  doing  some  training  in  geology  ought  to  be  a  com- 
monplace of  education,  just  as  geography  is.  In  fact  geology  is  a  mere 


360  THE  COST  OF  MINING 

amplification  of  geography.  I  do  not  mean  the  stereotyped  political 
geography  which  deals  with  the  names  of  countries,  of  cities,  of  counties 
and  county  seats,  but  with  the  fundamental  and  interesting  natural 
geography  which  deals  with  the  distribution  of  sea  and  land,  of  mountain 
systems,  drainage  systems,  the  movements  of  the  atmosphere  and  of 
ocean  waters,  the  distribution  of  heat  and  cold,  of  rainfall,  of  deserts, 
of  volcanoes  and  glaciers,  of  vegetation  and  animal  life  on  land  and  in  the 
sea.  The  normal  child  is  intensely  interested  in  some  or  all  of  these 
things.  With  this  as  a  foundation  it  would  be  very  easy  to  understand 
and  to  recognize  the  effects  which  would  be  produced  by  the  long  con- 
tinuance of  the  activities  of  winds,  rivers,  seas,  volcanoes,  glaciers, 
changes  of  level,  etc.  and  to  realize  the  legible  evidence  of  these  effects 
in  the  rocks,  soil  and  landscape  that  one  sees  every  day. 

The  Ozark  region  is  a  part  of  the  earth's  surface  where  the  geological 
record  is  one  of  extreme  simplicity  and  stability. 

A  few  miles  south  of  the  principal  lead  mines  is  a  group  of  granite 
and  porphyry  hills  known  as  the  St.  Francois  mountains.  Among 
them  are  some  famous  old  iron  mines  the  exploitation  of  which  was  the 
foundation  of  some  of  the  solid  fortunes  of  St.  Louis,  and  whose  existence 
prompted  the  construction  of  the  St.  Louis,  Iron  Montain  and  Southern 
Railroad,  now  one  of  the  trunk  lines  to  the  southwest.  A  casual  observa- 
tion shows  that  the  St.  Francois  mountains  are  a  series  of  rounded  knobs 
of  harder  and  older  rock  which  rise  up  through  the  layers  of  sandstone 
and  limestone  just  as  islands  rise  out  of  the  waters  of  the  sea.  A  very 
little  observation,  properly  directed,  will  make  it  plain  that  those  sand- 
stones and  limestones  do  actually  represent  the  work  of  the  sea.  This 
simple  observation  is  an  easy  starting  point  from  which  the  interested 
student  may  explore  the  geology  of  North  America.  Curiously  enough, 
no!  not  so  curiously  either,  for  this  is  the  usual  experience  in  such  things, 
this  observation  also  leads  to  an  understanding  of  many  important 
facts  about  the  lead  mines,  the  iron  mines,  the  drainage,  the  soil,  the 
climate  and  the  whole  basis  of  life  in  this  region.  In  the  rocks  of  the 
St.  Francois  mountains  and  of  the  lead  mines  one  may  see  perfect  evidence 
of  the  four  following  facts:  (1)  the  St.  Francois  mountains  are  part  of  an 
old  land  surface  no  doubt  an  earlier  development  of  our  present  continent, 
(2)  that  in  some  manner  the  level  of  this  part  of  the  continent  was 
lowered  and  the  ocean  which  is  now  no  nearer  than  the  gulf  of  Mexi 
flowed  in  until  it  submerged  the  whole  country  and  left  the  St.  Fran 
Mountains  sticking  up  as  small  islands,  hundreds  of  miles  from  he 
nearest  mainland,  (3)  that  the  sandstones  are  the  washed  and  assorted 
debris  which  the  advancing  ocean  found  on  the  old  land  surface,  and  that 
the  limestones  are  sediments  deposited  in  the  sea  water  probably  with  the 
help  of  organic  life,  that  these  materials  gradually  filled  up  this  mediter- 
ranean sea,  and  that  the  process  of  subsidence  went  on  slowly  enough 


SOUTHEAST  MISSOURI  361 

and  the  agencies  of  deposition  kept  at  work  fast  enough  to  keep  the  sea 
shallow  most  of  the  time  or  all  of  the  time,  and  (4)  that  the  period  of 
subsidence  came  to  an  end  altogether  and  was  followed  by  a  period  of 
slow  and  vacillating  elevation,  which  has  continued  for  an  enormous 
length  of  time  but  which  represents  on  the  whole  an  extraordinary 
stability  of  level  compared  with  other  parts  of  the  continent,  and  that 
while  the  Ozark  plateau  has  been  a  land  surface  for  interminable  ages 
the  greater  part  of  its  present  elevation  took  place  in  relatively  recent 
times. 

One  does  not  have  to  be  much  of  a  geologist  to  discern  that  all  of 
these  statements  are  facts,  as  well  and  plainly  recorded  as  any  facts  in 
human  history,  but  when  we  come  to  another  observation  relating  to  the 
lead  mines  the  evidence  is  not  so  definite  or  conclusive;  but  is  a  more  or 
less  well  founded  inference  which  we  will  call  (5)  that  the  lead  ores  were 
introduced  not  when  the  rocks  were  originally  deposited  but  later  by 
the  circulation  of  underground  waters  in  the  long  period  of  emergence 
and  erosion  mentioned  as  period  (4) . 

It  is  a  matter  not  entirely  academic  but  of  present  economic  interest 
to  picture  to  one's  self  the  extraordinary  difference  of  scene  one  might 
have  found  if  he  had  been  able  to  visit  the  St.  Francois  mountains  during 
late  Cambrian  times  when  the  great  Appalachian,  or  American  Mediter- 
ranean Sea  was  lapping  around  their  sides.  They  then  looked  somewhat 
as  they  do  now.  They  have  been  protected  through  all  these  ages  by  a 
partial  covering  of  other  rocks  which  formed  around  them.  Part  of  this 
casing  has  been  removed,  the  old  form  returning  to  vision  again  at  least 
as  much  like  what  it  was  in  Cambrian  times  as  the  mummy  from  an 
Egyptian  tomb  is  like  the  form  of  an  Egyptian  king.  They  were  a  group 
of  rather  abrupt  rocky  islands  surrounded,  as  all  such  islands  are,  by 
numerous  rocky  islets  and  reefs.  The  main  islands  were  rather  small, 
not  large  enough  for  streams  which  would  carry  much  gravel  or  sand  into 
the  sea  so  that  the  sand  had  only  a  moderate  source  of  supply  and  practi- 
cally all  of  it  lay  in  the  bottom  and  was  now  being  covered  up  by  a  calcare- 
ous sand  from  lime  which  was  slowly  being  precipitated  out  of  the  sea 
water. 

In  the  bays  and  shallow  reaches  of  sea  on  the  north  and  northeastern 
coast  of  these  islands  from  Big  River  past  Flat  River  toward  Doe  Run 
there  were  extensive  belts  of  sea  weed  perhaps  something  like  the  kelp 
belts  along  the  Santa  Barbara  channel  in  California.  Just  west  of  Bonne 
Terre  was  a  little  round  island  of  porphyry  around  which  the  waves 
lapped  harmlessly.  Off  the  east  side  of  this  little  island  there  was  a  belt 
of  sea  weed  which  stretched  liko  a  fish  hook  three-quarters  of  the  way 
around  it.  Only  on  the  northwestern  side  there  was  no  sea  weed. 

These  belts  of  seaweed  acted  very  much  like  belts  of  vegetation  do  on 
the  surface;  as  the  plants  lived  and  died  portions  of  them  settled  to  the 


362  THE  COST  OF  MINING 

bottom  and  formed  a  sort  of  soil  in  the  limy  bottom  of  the  ocean.  The 
thicket  of  kelp  kept  the  currents  from  washing  these  fragments  away 
just  as  a  thicket  of  trees  keeps  the  wind  from  blowing  the  falling  leaves 
away.  Thus  in  the  course  of  time  these  sea  weed  belts  became  the  sites 
of  deposits  of  a  vegetable  ooze  which  gradually  in  long  geologic  ages 
became  buried  in  the  increasing  deposit  of  limestone  and  other  sediment. 
As  the  rocks  hardened  under  the  increasing  weight  and  by  the  slow  chemi- 
cal interaction  these  patches  of  vegetable  ooze  became  patches  of  carbon- 
aceous shale. 

I  have  said  that  a  picture  of  the  conditions  under  which  those  lime- 
stones were  deposited,  if  corrrect,  would  not  be  wholly  academic.  I 
explain  this  now  by  adding  that  the  belts  of  carbonaceous  shale  in  the 
limestone  are  now  the  loci  of  the  great  lead  deposits  of  this  district.  It 
is  not  impossible  that  if  we  can  get  a  correct  idea  of  how  these  shale  patches 
originated  we  may  get  a  better  idea  of  where  to  look  for  them  and  a  clearer 
perception  of  how  much  to  expect  from  them. 

The  nearest  mainland  was  probably  due  north  in  Wisconsin  about 
400  miles  away.  Over  the  site  of  St.  Louis  the  water  may  have  been 
fairly  deep  but  this  is  not  determinable  with  certainty.  There  are  3600 
ft.  of  limestones  and  sandstones  under  St.  Louis  and  under  that  the  old 
granite  surface  of  the  pre-Cambrian  continent  has  been  found  in  a  drill 
hole,  but,  as  remarked  sometime  ago,  it  is  more  probable  that  the  sea  was 
never  very  deep,  a  respectable  portion  of  its  apparent  depth  having  been 
filled  with  sediments  during  the  process  .of  deepening.  Indeed,  it  is 
certain  that  this  was  the  case. 

The  foregoing  was  written  in  1917  and  was  interrupted  by  my  desire 
to  have  something  a  little  more  definite  to  say  regarding  the  geography 
of  Cambrian  times.  But  a  little  excursion  into  geological  literature  soon 
convinced  me  that  that  was  no  subject  that  the  text  books  had  a  matured 
answer  for.  The  more  I  read  the  less  I  knew,  and  at  last  I  am  convinced 
that  the  only  answer  is  a  mere  tabulation  of  facts  from  which  some  obvi- 
ous inferences  may  be  drawn. 

TABULATION  OF  PROMINENT  OCCURRENCES  OF  CAMBRIAN  AND  ORDOVICIAN  STRATA 

Thickness 
feet 

Bisbee,  Arizona — Sandstones  and  Limestones 1,500 

El  Paso,  Texas — Sandstones  and  Limestones 1,800 

Central  Texas — Sandstones  and  Limestones 800  + 

Grand  Canyon,  Arizona — Sandstones  and  Limestones 1,200 

Southern  New  Mexico — Sandstones  and  Limestones 1,200 

Central  Oklahoma — Sandstones  and  Limestones 5,000  + 

Northeastern  Alabama  and  \  0  T  . 

Northwestern  Georgia           )  Sandstone>  Lunestone  and  fehale 13,000  + 

Eastern  Tennessee  and  }  ~      .  ,         T  . 

TO-    .1     '   AT  /-<      T          >  Sandstone,  Limestone  and  Shale 11,000  + 

Western  N.  Carolina     .' 

Western  Nevada — Sandstone  and  Limestone 5,000 


SOUTHEAST  MISSOURI  363 

Inyo  Range,  Nevada-California — Sandstone,  Limestone  and  Shale 16,300 

Missouri — Sandstone,  Limestone  and  Shale 2,000  + 

Eastern  Pennsylvania — Sandstone  and  Limestone 10,000  + 

NCJW  Jersey — Sandstone,  Limestone  and  Shale Not  given 

New  York  City — Sandstone  and  Shale 5,000  + 

Boston — Shale Not  given 

Wyoming — Sandstone,  Limestone  and  Shale 1,000 

S.  Dakota — Sandstone,  Limestone  and  Shale 400 

St.  Paul,  Minnesota 1,000 

Adirondacks — Sandstone,  Limestone  and  Shale 12,000 

Southwestern  Montana — Sandstone,  Limestone  and  Shale 1,250 

Quebec — Sandstone,  Limestone  and  Shale 5,000 

St.  Johns,  New  Brunswick — Sandstone,  Limestone  and  Shale 2,800 

Northern  Newfoundland — Sandstone,  Limestone  and  Shale 6,000 

Canadian  Rockies — Sandstone,  Limestone  and  Shale 4 — 9,000 

Arkansas — Sandstone,  Limestone  and  Shale 4,000 

Throughout  the  vast  area  in  which  these  observations  have  been 
made,  the  Cambrian  and  Ordovician  sediments  are  generally  covered 
with  later  ones;  they  are  exposed  for  the  most  part  only  in  places  where 
the  rock  formations  have  been  bulged  up  above  the  general  level  so  that 
they  have  been  worn  through  by  erosion.  Areas  in  which  these  rocks 
do  not  occur  may  frequently  be  proved  to  have  been  merely  denuded  of 
them.  By  combining  these  facts  with  the  long  list  of  localities,  dotted 
all  over  the  country,  in  which  these  formations  may  be  seen,  and  with 
the  surprising  uniformity  in  the  character  and  the  succession  of  the 
materials  which  compose  them  we  arrive  without  difficulty  at  the  con- 
clusion that  in  early  Paleozoic  time  practically  the  whole  of  the  United 
States  with  large  adjacent  tracts  in  Canada  was  flooded  by  the  sea;  that 
these  were  none  of  the  mountains  with  which  we  are  familiar ;  no  Atlantic 
and  no  Pacific  coast.  The  highlands  of  the  continent  must  have  had  an 
alignment  nearly  at  right  angles  to  that  of  the  present  time,  i.e.,  nearly 
east  and  west.  It  seems  to  be  a  fair  guess  that  the  principal  divide  was 
along  the  line  of  the  pre-Cambrian  mountain  chain  which  may  be  traced 
from  Labrador  to  eastern  Minnesota  south  of  Lake  Superior.  This 
chain  is  buried  in  Minnesota  and  westward  under  later  sediments  but 
it  is  pointing  in  such  a  way  that  it  would,  if  continued,  reappear  in  the 
plateau  region  of  Wyoming  or  Colorado,  and  from  thence  might  easily 
swing  southwestward  to  north  central  Arizona  where  there  is  plenty  of 
evidence  of  post  Algonkian  and  pre-Cambrian  mountains.  A  dim  support 
to  this  theory  is  afforded  by  the  fact  that  in  Colorado,  northern  New 
Mexico  and  portions  of  Arizona  the  Cambrian  and  Ordovician  sediments 
are  either  absent  or  extremely  scanty.  What  is  certain  is,  that  the 
region  south  of  this  line  was  invaded  in  the  course  of  time  by  the  sea. 
It  was  probably  a  plain  sloping  gently  toward  the  south  or  southeastward 
and  this  plain  gradually  and  progressively  became  a  sea  floor  over  which 
the  water  was  never  profound  and  on  which  were  accumulated  the  Cam- 


364  THE  COST  OF  MINING 

brian  and  Ordovician  sediments,  the  measure  of  which  we  have  roughly 
taken. 

To  return  to  Southeast  Missouri  then  we  may  be  sure  that  when  the 
Bonneterre  limestone  was  forming  the  St.  Francois  mountains  were  at 
first  islands  which  gradually  became  islets  and  finally  sank  completely 
beneath  the  waves;  that  an  extensive  ocean  swept  through  without  a 
break.  I  am  certain  that  at  that  time  a  mariner  might  have  embarked 
at  some  point  between  Jerome  and  Grand  Canyon,  Arizona  on  the  north 
shore  of  either  an  island  or  a  peninsula,  and  from  thence  he  might  have 
sailed  freely  on  a  clear  sea  over  Reno,  over  the  site  of  the  Sierra 
Nevada,  over  San  Francisco  and  Los  Angeles,  thence  eastward  over 
Tucson,  Bisbee,  El  Paso,  over  the  great  plains  of  Texas  and  Oklahoma, 
over  the  Ozarks,  over  St.  Louis  and  Chicago,  Cincinnati,  Buffalo,  Phila- 
delphia, New  York,  Boston,  Montreal  and  Quebec.. 

REMARKS  ON  PALEOZOIC  GEOGRAPHY 

While  it  is  probably  true  that  the  broad  groupings  of  Algonkian, 
Paleozoic  and  Mesozoic  have  the  meaning  indicated  in  the  chapter  on  coal 
it  would  be  a  mistake  to  interpret  it  too  narrowly.  Terrestrial  conditions 
were  not  uniform  throughout  any  of  those  times.  Thus  the  Algonkian 
in  Lake  Superior  was  separated  into  three  general  periods  of  sedimenta- 
tion, by  two  intervening  periods  of  general  erosion,  brought  about  by  the 
elevation  of  the  region  and  by  considerable  mountain  building.  Similarly 
the  Paleozoic  series  exhibits  changes  certainly  on  a  continental,  and  pos- 
sibly on  a  world  wide,  scale.  It  seems  that  there  is  a  pretty  sharp  dis- 
tinction between  the  Lower  and  Upper  Paleozoic  in  North  America. 
The  important  break,  or  change,  occurred  at  the  beginning  of  Silurian 
time,  the  disturbance  being  a  very  widespread  elevation  of  the  continent, 
which  in  the  preceding  Cambrian  and  Ordovician  periods  had  been  very 
generally  invaded  by  the  sea.  Desert  conditions  supervened.  A  large 
tract  of  water,  covering  the  western  parts  of  New  York  and  Pennsylvania, 
the  whole  of  West  Virginia,  Ohio,  and  Indiana,  portions  of  Kentucky, 
Illinois,  southern  Michigan  and  southern  Ontario,  must  have  been  shut 
off  from  the  ocean  and  exposed  to  so  dry  a  climate  that  it  evaporated, 
leaving  immense  salt  deposits  covered  tightly  by  shales  that  probably 
represent  the  dust  of  the  desert. 

The  immediate  cause  of  such  a  revolutionary  change  of  climate  was, 
not  improbably,  the  formation  of  an  important  range  of  mountains  on 
the  general  line  from  the  Gaspe  Peninsula  through  Vermont,  western 
Massachusetts  and  Connecticut  to  New  York  City  and  south  west  ward. 
It  might  be  called  the  Manhattan  Range,  for  it  is  as  well  developed  on 
Manhattan  Island  as  anywhere  else.  At  present  of  course  nothing  re- 
mains of  these  mountains  but  their  base-leveled  core.  But  all  the  evi- 
dences of  mountain  building  are  there — sharp  folding,  igneous  intrusions 


SOUTHEAST  MISSOURI  ,    365 

and  extensive  metamorphism.  The  highly  crystalline  schists  in  Central 
Park  are  of  upper  Ordovician  age;  the  same  age  to  which  some  of  the 
oil  bearing  strata  of  Ohio  belong  and  younger  by  far  than  the  undisturbed 
rocks  of  Flat  River.  The  axis  of  the  mountains  is  clearly  shown  by  the 
metamorphism.  Westward  from  this  axis  the  same  rocks  are  found  in 
various  folds,  but  the  metamorphism  disappears  rapidly  until  at  Fishkill 
and  Poughkeepsie  it  has  disappeared  altogether;  the  rocks  are  twisted 
but  not  recrystallized. 

The  southward  continuation  of  this  ancient  range  is  obscure  and 
perhaps  will  remain  so.  At  New  York  City  it  disappears  under  the 
waters  and  under  the  later  sediments  of  the  coast  line,  but  it  reappears 
in  the  vicinity  of  Philadelphia  where  it  points  toward  the  low  foothill 
region  eastward  of  the  Blue  Ridge  of  Virginia,  and,  I  imagine,  may  have 
extended  all  the  way  to  Georgia  and  Alabama,  perhaps  much  further 
still.  But  geologists  do  not  seem  to  have  recognized  it.  They  have 
generally  supposed  that  the  crystalline  area  of  the  foothill  or  Piedmont 
region  of  the  Appalachians  was  a  pre-Cambrian  island  or  continent 
that  remained  exposed  during  Paleozoic  time.  They  call  this  supposed 
island  Appalachia.  Some  study  of  the  literature  on  the  subject  does  not 
convince  me  that  there  was  any  Appalachia  in  pre-Silurian  times.  It 
appears  rather  that  it  is  merely  a  zone  of  mountain  building  and  erosion. 
Immense  masses  of  Cambrian  and  Ordovician  limestones  and  shales 
are  crowded  into  folds  along  its  northwestern  flanks.  "Metamorphism 
increases  toward  the  southeastward,"  is  a  common  phrase  in  describing 
them.  The  character  and  thickness  of  these  sediments,  that  is,  their 
uniformity  over  large  areas  and  the  fact  that  they  are  generally  of  marine 
origin,  are  pretty  strong  evidence  that  they  could  not  originally  have 
terminated  so  abruptly  along  such  a  line.  If  they  had  these  would 
have  been  evidence  of  shore  line  conditions;  but  the  contrary  seems  to  be 
the  case.  Moreover  what  does  the  metamorphism  mean?  Why  should 
there  have  been  metamorphism  only  along  a  supposed  shore  line?  I 
prefer  to  believe  that  the  evidence  points  to  something  like  the  following: 

1.  In  Cambrian  and  Ordovician  times  the  sea,  or  at  least  low  plains 
partially  or  occasionally  flooded  by  ocean  water,  spread  continuously 
from  the  Atlantic  over  the  present  Appalachian  highlands  and  far  to 
the  northward  invading  in  fact  a  large  part  of  the  present  continent, 
rather  uniformly.     In  other  words  the  continent  became  pretty  well 
baseleveled. 

2.  The   beginning   of   Appalachia   was   the   emergence   of   a   great 
mountain  range  in  early  Silurian  or  late  Ordovician  time,  along  the  line 
described.     This  event  was  coincident  with  the  general  emergence  of  the 
continent,  which  was  the  cause  perhaps  of  a  general  change  of  climate 
throughout  the  world,  certainly  in  North  America,  and  very  likely  this 
change  had  much  to  do  with  the  evolution  of  living  creatures.     This 


366  THE  COST  OF  MINING 

mountain  range  of  Appalachia  was  a  long  and  high  one  and  its  erosion 
produced  much  of  the  sediments  which  filled  the  interior  valley  during 
later  Paleozoic  time. 

But  in  the  lower  Paleozoic  time  in  which  the  rocks  of  southeast 
Missouri  were  accumulated  it  seems  fair  to  conclude  that  nearly  the  whole 
of  the  United  States  was  an  open  sea.  The  region  later,  through  the 
emergence  of  distant  barriers,  became  the  central  portion  of  a  continental 
valley.  Minor  oscillations  of  level  have  at  various  times  caused  this  great 
valley  to  be  alternately  a  spreading  shallow  sea  and  a  great  interior  plain. 
The  climate  has  varied  from  desert  to  sub-arctic,  probably  from  the  effect 
of  the  barriers  that  have  arisen  and  disappeared  at  various  times.  No 
true  mountain  building  stresses  and  no  volcanic  activity  has  affected 
this  great  area  in  all  this  stretch  of  many  million  years.  The  rocks 
have  been  disturbed  slightly  but  to  the  eye  they  are  as  horizontal  as 
when  first  laid  down. 

In  the  preceding  chapter  it  was  pointed  out  that  silver-lead  deposits 
in  the  west  are  consequent  upon  igneous  activity.  The  strange  thing 
about  the  lead  and  zinc  deposits  of  the  Mississippi  valley  is  that  there  has 
been  no  such  activity  within  many  hundred  miles.  But  the  deposits 
occur  over  a  very  wide  area,  almost  wherever  these  lower  Paleozoic 
rocks  are  found,  and  often  in  the  upper  Paleozoic  rocks  as  late  as  the 
Pennsylvanian — in  Oklahoma,  Kansas,  Arkansas,  Missouri,  Iowa,  Wis- 
consin, Illinois,  Kentucky  and  Tennessee.  In  the  Ozark  region  one  or 
two  paltry  dykes,  quite  unmineralized,  have  been  found;  barely  enough 
igneous  action  to  emphasize  its  general  absence.  Nevertheless  there  is  in 
all  these  places  an  assemblage  of  sulphide  minerals  almost  exactly  like 
those  of  the  magmatic  deposits  of  the  west,  but  in  different  proportions. 
The  single  exception  is  vein  quartz.  There  are  in  places  enormous 
quantities  of  chert  or  flint,  but  there  seems  to  be  little  if  any 
association  of  this  mineral  with  the  metallic  sulphides.  In  many  places 
it  is  completely  absent.  But  sulphides  of  iron,  copper,  lead  and  zinc, 
with  silver,  nickel,  cobalt,  manganese  and  barium  are  widely  distributed. 

In  the  Flat  River  region  the  principal  locus  of  the  mineralization  is  the 
Bonne  Terre  or  basal  Cambrian  limestone.  This  stratum  is  about  400 
ft.  thick.  It  is  so  generally  mineralized  with  disseminated  iron  pyrites 
that  it  weathers  to  a  bright  red  residual  soil.  This  redness  is  decidedly 
more  pronounced  in  the  neighborhood  of  the  principal  lead  deposits. 
A  tract  of  about  15,000  acres  of  this  limestone  produces  regularly  a  third 
of  the  lead  of  the  United  States  and  12  to  15  per  cent,  of  that  of  the  world. 

In  this  field  the  external  conditions  are  favorable.  Mining  is  con- 
ducted in  the  midst  of  the  great  agricultural  regions  of  the  Mississippi 
Valley,  where  the  cost  of  living  is  low,  labor  abundant,  fuel  and  trans- 
portation cheap,  and  markets  close  at  hand.  The  internal  factors  also 
also  are  favorable  to  low  costs.  The  depths  reached  are  not  great,  the 


SOUTHEAST  MISSOURI  367 

orebodies   are   fairly  large  and  persistent,  though  somewhat  irregular. 
Drilling  provides  against  underground  perplexities. 

In  the  southeast  district  there  is,  unfortunately,  little  to  be  found  in 
the  way  of  reports  of  mining  companies.  The  following  notes  are  from 
my  own  observation,  and  while  I  cannot  vouch  for  the  accuracy  of  the 
figures  as  representing  any  particular  property,  I  believe  that  they  may 
be  taken  as  fairly  representing  the  district  as  a  whole. 

SOUTHEAST  MISSOURI  LEAD 

Mining  in  southeast  Missouri  is  based  on  orebodies  that  carry  an 
average  of  about  5  per  cent.1  in  metallic  lead,  or  a  little  more.  The  ore 
is  called  disseminated  from  the  fact  that  the  galena  is  often  sprinkled 
through  the  limestone,  although  usually  most  of  the  lead  is  confined  to 
rich  streaks.  It  concentrates  well  and  can  be  turned  into  a  65  or  70  per 
cent,  product,  with  a  saving  of  80  per  cent.  Commercially  speaking, 
therefore,  the  ore  yields  about  4  per  cent,  net  lead. 

The  formation  lies  approximately  flat,  though  grades  of  from  3  to  10 
per  cent,  are  not  uncommon.  It  has,  throughout  the  district,  a  gentle 
dip  toward  the  southwest.  The  ore  now  being  mined  occurs  mostly 
in  the  lower  100  ft.  of  the  Bonne  Terre  limestone,  and  often  at  the  very 
bottom  of  this  formation  in  contact  with  an  underlying  sandstone. 
Occasionally  it  happens  that  in  the  100  ft.  just  mentioned  there  are 
successive  enrichments,  making  workable  orebodies  one  above  the  other. 
In  this  case  more  than  one  level  may  be  necessary.  But  it  is  more 
common  to  find  only  one  large  irregular  sheet  of  ore  immediately  above 
the  sandstone,  so  that  it  can  all  be  worked  from  one  level ;  although  some- 
times the  ore  may  shoot  up  some  distance  above  the  general  level.  The 
upper  orebodies  are  relatively  unimportant. 

The  ore  zone  may  carry  some  lead  scattered  through  the  rock  on 
both  sides  of  the  workable  channels,  which  may  be  only  5  ft.  wide.  The 
fissures  are  sometimes  the  source  of  the  ore  from  which  it  has  fed  out 
into  the  surrounding  rocks.  The  richest  ore,  in  such  cases,  is  right  at 
the  fissure,  and  it  fades  out  on  either  side,  so  that  midway  between 
fissures  the  ore  may  be  too  poor  to  work.  The  ore  is  workable  to  a 
thickness  varying  from  6  ft.  to  as  much  as  100  ft. 

EXPLORATIONS  IN  THE  SOUTHEAST  DISTRICT 

It  will  be  evident  from  the  above  that  the  exploration  of  these  ore- 
bodies  by  the  sinking  and  drifting  methods  used  in  Western  mines  would 
be  difficult  and  unsatisfactory.  To  follow  the  ore  underground,  it  is 
almost  necessary  to  stope  the  ore  as  you  go.  There  is  enough  vertical 

1  The  average  is,  in  1919,  about  4  per  cent. 


368  THE  COST  OF  MINING 

irregularity  to  prevent  following  the  ore  successfully  by  horizontal  drifts; 
and  there  is  enough  horizontal  irregularity  to  make  it  impossible  to  keep 
in  the  channel,  unless  you  are  prepared  to  follow  up  each  turn.  If  the  ore 
rises  you  must  be  prepared  to  go  up  after  it ;  if  it  sinks  you  must  go  down 
after  it. 

The  problem  of  blocking  ore  out  ahead  has  resolved  itself  entirely 
into  diamond  drilling  from  the  surface.  This  varies  in  difficulty  accord- 
ing to  the  depth.  The  formation  dips  slightly  toward  the  southwest, 
while  the  surface  rises  a  little  in  that  direction.  The  southwestern  part 
of  the  field  is,  therefore,  the  deepest  part.  In  the  older  mines  at  Flat 
River,  the  depth  to  the  sandstone  is  only  300  to  400  ft.  In  the  newer 
mines  like  the  Derby  (Federal)  and  the  Hoffman  (St.  Joe)  the  depth  is 
500  to  600  ft.  In  the  deepest  part,  between  Leadwood  and  Irondale, 
the  depth  is  from  500  to  800  ft.  When  the  depth  is  not  over  550  ft.,  the 
drilling  is  all  through  very  favorable  rock;  but  where  it  is  deeper,  the 
cherty  Potosi  limestone  comes  in.  This  cherty  formation  is  very  hard 
to  drill  through,  and  it  is  best,  whenever  it  is  found,  to  use  a  churn  drill 
through  that  formation,  and  then  put  in  a  diamond  drill. 

The  drill  is  used  first  to  find  out  in  a  general  way  the  position  of  the 
ore  channel  by  running  a  line  of  holes  at  intervals  of  about  200  ft.  When 
lead  ore  is  found  that  looks  worth  following  up,  holes  are  put  in  closer  in 
the  attempt  to  follow  it  in  its  usual  course.  If  ore  is  found  in  consider- 
able amount  in  15  or  20  holes,  enough  is  blocked  out  to  justify  sinking  a 
shaft.  As  a  general  rule  it  is  not  found  desirable  to  try  to  map  out  the 
orebody  accurately  by  drilling  until  some  progress  has  been  made  in 
stoping  it,  and  more  knowledge  gained  about  its  peculiarities. 

Owing  to  the  soft  nature  of  the  richer  ore  streaks,  the  drill  cores  in- 
variably give  an  underestimate  of  the  value  of  the  ore.  Even  where 
ground  is  most  carefully  drilled,  the  actual  mining  shows  from  20  to  100 
per  cent,  more  lead  ore  than  the  drilling  would  indicate.  It  is  very 
common  to  have  blank  holes  in  the  middle  of  a  good  orebody  through 
grinding  up  of  the  ore  streaks.  Owing  to  the  irregular  shape  of  the 
deposit,  some  poor  ground  is  apt  to  run  into  the  middle  of  the  space 
occupied  by  the  ore.  For  these  reasons  it  often  happens  that  one-half 
the  holes,  even  in  good  stoping  ground,  do  not  indicate  pay  ore. 

The  cost  of  drilling  for  many  years  went  constantly  upward,  owing 
to  the  increased  price  of  diamonds  and  of  labor.  Where  drilling  could 
be  done  about  1900  for  40  to  50  cents  a  ft.,  in  1907  it  cost  from  $1  to 
$1.25  per  ft.  In  the  deeper  holes,  where  the  Potosi  limestone  must  be 
penetrated,  the  cost  probably  averages  $1.50  per  ft.  Subsequently 
events  have  reduced  these  costs  again. 

The  above  description  refers  especially  to  the  mines  in  the  vicinity 
of  Flat  River  only.  At  Bonne  Terre  the  orebodies  are  a  little  different, 
in  that  the  longer  axis  there  seems  to  extend  N.E.-S.W.,  instead  of  N.W.- 


SOUTHEAST  MISSOURI  369 

S.E.  These  orebodies  are  northeast  from  the  ore  zones  of  Flat  River. 
It  now  seems  very  probable  that  a  connection  will  be  established  between 
Bonne  Terre  and  the  Flat  River  orebodies. 

Extent  of  the  District. — As  remarked  above,  a  line  taken  around  the 
productive  mines  incloses  an  area  of  only  about  15,000  acres  and  from 
this  a  production  rising  from  50,000  tons  in  1900,  to  100,000  in  1907  and 
to  200,000  in  1916  has  been  taken  but  outside  of  this  area  are  a  number 
of  other  places  where  ores  of  the  same  kind  have  been  mined.  At  Doe 
Run,  Fredericktown,  and  Mine  La  Motte  are  important  occurrences 
which  diTer  from  the  above-described  field  only  in  that  they  are  in  shal- 
lower basins  of  limestone,  which  are  interrupted  by  knobs  of  pre-existing 
granite.  At  Fredericktown  the  ores  carry,  besides  lead,  copper,  nickel, 
and  cobalt.  At  the  North  American  mine  at  that  place  considerable 
ore  has  been  found  that  carries  5  per  cent,  copper  and  2.5  per  cent, 
nickel  and  cobalt.  Everything  indicates  that  there  are  possibilities  of 
extension  in  copper  mining  in  that  neighborhood.  The  copper  ores 
have  exactly  the  same  structural  characteristics  as  the  orebodies  above 
described,  except  that,  instead  of  pure  galena,  the  ore  is  mainly  sulphides 
of  copper,  nickel,  and  cobalt. 

Following  is  the  discussion  that  appeared  in  the  first  edition.  It  was 
probably  nearly  correct  at  that  time  and  is  retained  in  order  to  indicate 
later  the  directions  in  which  changes  have  been  made. 

Problem  of  Mining  in  the  Southeast  District. — The  most  difficult  part  of 
actual  mining  operations  is  the  preliminary  exploration  by  drilling.  This  de- 
termines the  depth  to  which  the  shafts  must  be  sunk,  and  their  location.  Usually 
only  one  level  is  necessary,  but  the  fact  that  the  ore  does  not  lie  exactly  flat  makes 
some  provision  for  hauling  cars  up  and  down  hill  necessary.  This  can  best  be 
done,  I  believe,  by  electric  haulage.  This  has  been  installed  at  one  of  the  Fed- 
eral plants  and  is  very  effective.  Provision  must  also  be  made  sometimes  for 
secondary  pumping  to  raise  water  from  depressions  that  may  reach  lower  than  the 
shaft-pumping  station.1 

The  stoping  is  very  simple.  No  timbers  are  used.  Round  pillars  of  ore  are 
left,  containing  10  to  15  per  cent,  of  the  ore.  It  is  often  possible  to  leave  pillars 
in  the  poorer  parts  of  the  deposit  by  laying  out  the  main  entries  so  as  to  follow 
the  rich  ore  along  the  fissures.  Underground  diamond  drilling  is  necessary  in 
some  mines  to  prospect  ahead  for  water  channels.  These  are  open  fissures  that 
carry  so  much  water  that,  if  broken  into  carelessly,  they  make  disastrous  gushes. 
Some  shafts  are  pretty  wet,  making  1300  to  1500  gal.  of  water  a  minute.  The 
usual  output  from  each  shaft  is  about  300  tons  a  day.  This  output  may  be 
greatly  exceeded,  however,  by  the  use  of  electric  haulage  so  as  to  cover  a  large 
area  from  one  opening.  Ventilation  may  be  secured  by  drilling  large  churn-drill 
holes  from  the  surface. 

1  In  some  of  the  mines  compressed  air  locomotives  are  used,  apparently  to 
advantage. 

24 


370  THE  COST  OF  MINING 

The  most  economical  power  equipment  used  in  the  district  is  at  the  plant  of 
the  St.  Louis  Smelting  and  Refining  Company.  Here  a  central  steam  plant  oper- 
ates a  compressor  and  an  electric  generating  plant.  The  mill,  hoists,  and 
pumps  are  operated  by  electricity.  Electric  trams  are  also  used  to  haul  the 
ore  from  various  shafts  to  the  mill. 

The  cost  of  mining,  hoisting,  and  pumping  is  from  $1  to  $1.50  per  ton. 
To  this  may  be  added  10  cents  a  ton  for  drill  prospecting,  and  about  10  cents 
a  ton  for  hauling  the  ore  to  the  mill.  The  total  cost  of  ore  is  therefore,  from 
$1.20  to  $1.70  at  the  mill. 

The  Problem  of  Milling  the  Ores. — The  milling1  practice  is  now  pretty 
well  established.  The  ore  is  ground  to  9  mm.  Everything  smaller  than 
9  mm.  is  screened  out  as  soon  as  the  ore  passes  the  crusher.  When 
crushed,  the  ore  is  screened  to  various  sizes,  from  9  to  2  mm.,  and  this 
product  jigged.  The  tailings  from  the  coarser  jigs  are  all  re-ground. 
The  material  below  2  mm.  is  classified  and  treated  on  Wilfley  tables,  as 
are  also  the  re-ground  tailings.  Middlings  from  the  tables  are  also  re- 
ground  in  Huntington  mills  and  treated  on  Frue  vanners. 

The  cost  of  milling  in  a  1000-ton  plant  is  from  30  to  75  cents  per  ton. 
The  cost  of  a  concentrating  mill,  together  with  a  power  plant  for  the 
mines,  may  be  estimated  at  $500,000  for  1000  tons  capacity.  The  new 
plant  built  by  the  Federal  Lead  Company  handles  about  2400  tons  a  day. 
It  is  built  of  steel  and  concrete,  has  a  large  air-compressing  and  electric 
plant,  and  elaborate  crushing  and  sampling  arrangements.  It  cost 
$900,000; 

The  Problem  of  Smelting  the  Ores. — Smelting  may  be  considered 
either  on  a  custom  or  an  operating  basis.  The  ore  leaves  the  mill  in 
the  shape  of  a  concentrate  carrying  70  per  cent,  lead  and  5  per  cent,  mois- 
ture. Freight  to  East  St.  Louis  is  about  $1.50  per  dry  ton.  This  ore 
may  be  sold  to  custom  smelters,  who  will  pay  for  90  per  cent,  of  the  lead 
at  current  quotations,  and  charge  from  $6  to  $8  per  ton  smelting  charges. 
On  this  basis,  the  cost  of  freight  and  treatment  figures  as  follows: 

i 

!  Lead,  4  cents  i  Lead,  5  cents  |  Lead,  6  cents 


Freight  

I 
1        $1  50 

$1  50 

$1  50 

Treatment  say  

7  00 

7  00 

7  00 

Deduction  10  per  cent.,  140  Ib  

5  60 

7  00 

8  40 

Total  

$14.10 

$15.50 

$16.90 

On  an  operating  basis  the  cost  is  about  $6  per  ton,  and  the  loss,  with 
the  best  practice,  3  per  cent. : 

1  Since  this  was  written  a  considerable  change  has  occurred  through  the  extensive 
use  of  Hancock  jigs. 


SOUTHEAST  MISSOURI 


371 


Lead,  4  cents  I  Lead,  5  cents  i  Lead,  6  cents 


Freight  and  treatment                                          '       $7  50 

$7  50 

$7  50 

Deductions,  42  Ib.  lead  1  .  68 

2.10 

2.52 

Total  $9.18 

$9.60 

$10.02 

On  average  prices  there  would  be  a  saving  of  about  $5.50  per  ton  of 
concentrates  in  operating  a  smelter.  But  it  must  be  remembered  that 
the  above  costs  could  only  be  secured  by  a  plant  handling  a  considerable 
tonnage,  say  3000  to  4000  tons  a  month. 

Let  us  now  consider  the  cost  of  the  entire  operation  with  due  regard 
to  both  capital  and  operating  charges.  In  the  utter  lack  of  any  official 
statements  of  the  companies  operating  in  the  Flat  River  district  I  shall 
have  to  make  an  estimate  of  my  own,  with  due  apologies  to  the  secretive 
persons  who  control  the  mines  for  rashly  guessing  at  their  secrets,  and  to 
the  public  for  any  inaccuracies. 

The  companies  operating  in  the  district  are  the  following: 


- 

Mill  capacity 

Shafts 
operated 
1908 

Dividends 

Deslodge  Lead  Co     .... 

800  tons  per  day 

3 

Not  stated 

St.  Joe  Lead  Co  

2,700  tons  per  day 

8 

$6,308,357 

Doe  Run  Lead  Co     

800  tons  per  day 

4 

1,859,893 

St.  Louis  Smelting  &  Refining  Co  
Federal  Lead  Co  

1,500  tons  per  day 
3,000  tons  per  day 

4 
6 

Not  stated 
Not  stated 

Five  companies  

8,800  tons  per  dav  ' 

25 

Total  output  1908  estimated  at  100,000  tons  pig  lead.  If  we  call 
this  an  average  output  and  figure  that  the  mills  ran  300  days  a  year,  we 
get  a  total  of  2,640,000  tons  and  an  average  yield  of  less  than  4  per  cent. 
I  believe  that  this  is  an  overestimate  for  tonnage  and  an  underestimate 
for  yield  for  this  particular  year,  but  not  for  the  long  run.  I  shall  base 
my  calculations  on  the  performance  of  this  district  on  a  yield  of  4  per  cent, 
refined  lead,  at  a  price  of  4^  cents  per  pound.  I  shall  exclude  from  my 
calculations,  as  usual,  the  money  paid  for  mining  land  on  the  theory  that 
that  is  a  part  of  the  profit  won  from  the  industry.  I  shall  proceed  to 
compute  the  capital  invested  in  the  industry  and  figure  the  use  of  it  as 
an  integral  part  of  the  operating  cost. 

Capital  in  Exploration  of  Lands. — This  must  amount  to  about  $2,500- 
000.  The  greater  part  of  this  has  been  spent  by  the  St.  Joe  and  Doe  Run 
lead  companies,  with  the  Federal  Lead  Company  (including  the  Central) 


372  THE  COST  OF  MINING 

a  close  third.  It  is  probable  that  the  ore  in  sight  is  sufficient  for  about 
seven  years. 

Capital  in  Shafts  and  Mining  Plants.— This  I  estimate  at  $2,100,000, 
being  $60,000  each  for  the  twenty-five  shafts  in  operation  and  for  ten 
other  shafts  discarded  or  not  operating. 

Capital  in  Milling  Plants  and  Power. — I  estimate  this  at  $4,400,000, 
being  $3,400,000  for  plants  in  use,  and  $1,000,000  for  discarded  plants, 
experiments,  and  failures. 

Capital  in  transportation  equipment  from  mines  to  mills,  but  not 
including  railroads  leading  out  of  the  district,  may  be  estimated  very 
roughly  at  $1,500,000. 

Capital  in  Smelting  Plants. — Including  some  capacity  for  smelting 
outside  ores,  this  amounts  to  some  $2,500,000,  including  workmen's 
houses,  lands  at  plant,  etc. 

Working  capital,  $2,800,000,  being  equal  to  the  value  of  the  lead 
output  for  three  months. 

We  have  then: 

Capital  in  explorations $2,500,000 

Capital  in  mining  plants 2,100,000 

Capital  in  milling  plants 4,400,000 

Capital  in  transportation  plants 1,500,000 

Capital  in  smelting  plants 2,500,000 

Working  capital 2,800,000 


Total $15,800,000 

This  is  equal  to  $6  per  ton  of  annual  output. 

The  use  of  this  capital  can  hardly  be  calculated  at  less  than  10  per 
cent,  which  is  sufficient  to  return  the  investment  in  fifteen  years  with  5 
per  cent,  interest.  This  calculation  does  not  apply  to  working  capital, 
however,  for  that  is  a  quick  asset  that  can  always  be  liquidated.  As 
long  as  it  is  in  the  business,  however,  it  must  be  considered  with  5  per 
cent.  We  have  then  for  amortization: 

10  per  cent,  on  $13,000,000  risked  in  business $1,300,000 

5  per  cent,  on      2,800,000  working  capital 140,000 


Total  annual  charge $1,440,000 

This  is  equal  to  $14.40  per  ton  lead  and  57.6  cents  per  ton  of  ore  mined. 

The  depreciation,  or  current  construction  of  plants,  to  take  care  of 
changes  in  method,  improvements,  removals,  etc.,  should  be  calculated 
at  6  per  cent,  on  capital  invested.  This  will  equal  $780,000,  accounting 
for  $7.30  per  ton  of  lead  and  31.2  cents  per  ton  crude  ore. 

We  have  now  covered  all  the  charges  incident  to  the  business  except 
the  current  operating  charges.  These  may  be  estimated  as  follows, 
giving  due  consideration  to  varying  conditions: 


SOUTHEAST  MISSOURI 


373 


Per  ton,  crude 

Per  ton 

concentrate 
yield  65 
per  cent. 

Per  ton,  pig  lead 

Mining  and  hoisting  
Transfer  to  mills  
Milling 

$1.00    to  $1.50 
0.05    to    0.10 
0  30    to    0  50 

$25.00  to  $37.50 
1.25  to      2.50 
'  7  50  to    12  50 

General  expense  
Freight  to  St.  Louis  
Smelting  

0.10    to    0.20 
0  .  097  to    0  .  097 
0.378  to    0.378 

$1.60 
6.00 

2.  50  to      5.00 
2  .  44  to      2  .  44 
9  .  23  to      9  .  23 

Total  operating  
Add  depreciation  

$1.925  to  $2.775 
0.312  to    0.312 

$47.88  to  $69.17 
7.  80  to      7.80 

Dividend  cost  
Add  amortization  

$2.  237  to  $3.  087 
0.576  to    0.576 

$55.  68  to  $76.  97 
14.  40  to    14.40 

$2  813  to  $3  663 

$70.08  to  $91.37 

We  find  that  the  mines  can  pay  dividends  on  what  remains  above 
from  2  8  to  3.85  cts.  per  pound,  say  for  an  average  3.3  cents.  They  can 
justify  their  investment  at  a  price  of  from  3.5  to  4.5  cents,  or  in  round 
numbers,  4  cents  per  pound. 

This  I  believe  is  a  fair  exhibit  of  the  entire  business.  I  do  not  pretend 
that  the  mines  will  not  show  great  differences  from  these  figures.  The 
differences  I  have  placed  in  the  operating  cost  columns  are  intended  to 
cover,  for  mining:  the  difference  between  a  thick  and  a  thin  orebody, 
between  dry  and  wet  mines;  in  milling,  the  dPerence  in  the  milling  quality 
of  the  ores,  between  simple  and  elaborate  processes,  and  between  small 
mills  and  big  ones;  in  general  expense,  the  dif  erence  between  simple  and, 
elaborate  managements.  There  have  been  failures  in  the  district.  It 
am  striking  an  average  of  the  successes. 

That  these  figures  are  not  far  from  the  truth  may  be  gathered  from 
the  records  of  the  St.  Joe  Lead  Company,  which  paid  more  than  $5,7005, 
000  in  dividends  and  built  up  its  property  greatly  from  an  output  of 
about  300,000  tons  of  lead.  This  indicates  a  profit  of  0.95  cents  per 
pound.  Deducting  this  from  an  average  price  of  4.5  cents  we  get  an 
average  cost  of  3.55  cents,  less  whatever  surplus  may  be  credited  from 
surplus  in  the  treasury.  The  cost,  of  course,  fluctuates  with  the  times. 
It  is  always  possible  during  periods  of  depression  to  produce  more  cheaply 
by  cutting  wages  and  curtailing  construction  and  development; -on  the 
other  hand,  in  boom  times  wages  are  raised  and  people  embark  in  unusual 
expenditures  for  expansion  and  development.  As  a  matter  of  fact,  lead 
was  sold  in  St.  Louis  from  the  Flat  River  district,  in  the  years  following 
the  panic  of  1893,  as  low  as  2.6  cents  per  pound  without  loss;  but  in  the 
boom  period  of  1906-7  it  is  doubtful  if  any  of  the  mines  were  producing 
it  for  less  than  4  cents." 


374  THE  COST  OF  MINING 

In  the  period  since  1908  the  changes  worth  particular  note  are: 

1.  A  great  increase  in  the  production  per  shaft.     It  will  be  noted  that 
in  1908  25  shafts  were  operating  for  a  total  output  of  8800  tons  a  day; 
now  not  over  14  shafts  are  yielding  at  least  16,000  tons  a  day.     In  most 
cases  they  are  the  same  shafts.     The  motive  behind  this  change  was  the 
desire  more  fully  to  utilize  the  equipment,  which  is  tantamount  to  saying 
in  this  case  that  it  was  not  worth  while  to  operate  four  shafts  when 
one  would  do  just  as  well.     The  leader  in  this  improvement  was  Mr. 
H.  A.  Guess,  who  was  for  a  number  of  years  local  manager  of  the  Federal 
Lead  Co. 

2.  Similarly,  to  take  an  example,  the  mill  of  the  Federal  Lead  Co. 
which  was  designed  for  an  output  of  2400  tons  a  day,  was  made  to  treat 
5000  tons  by  virtue  of  minor  changes  and  adjustments. 

It  was  found  that  it  took  no  more  men  to  work  the  machinery  twice 
as  hard  so  that  it  worked  out  that  the  output  per  man  for  mining  and 
milling  was  doubled.  This  was  a  signal  achievement  which  is  touched 
on  to  some  extent  in  other  chapters. 

3.  The  introduction  of  oil  flotation  has  made  and  is  still  making 
important  changes  in  the  scheme  of  milling.     It  is  now  possible  to  recover 
90  per  cent,  of  the  lead,  while  with  water  alone  the  recovery  scarcely 
reached  80  per  cent,  on  the  best  ores  and  probably  in  some  cases  fell 
below  70  per  cent.     Perhaps  the  jigs  will  finally  be  discarded  altogether. 
At  the  Bonne  Terre  mill  the  ore  is  now  ground  at  once  to  2  millimeters 
and  washed  on  tables  which  take  out  a  large  part  of  the  clean  galena  and 
also  reject  the  coarser  and  nearly  barren  sand;  the  remaining  tailings 
and  slimes  are  then  treated  by  flotation.     It  is  found,  by  the  way,  that 
the  limestone  of  this  district  cannot  be  ground  as  readily  in  ball  or  rod 
mills  as  many  of  the  silicious  ores  of  the  west. 

.  4.  The  St.  Joseph  and  Doe  Run  Lead  Companies  have  been  consoli- 
dated and  reorganized.  Great  economies  have  been  made  in  the  produc- 
tion and  use  of  power,  in  the  distribution  of  supplies,  in  the  operation  of 
the  transportation  system  and  in  the  process  of  smelting.  This  one 
concern  has  made  an  output  of  as  much  as  110,000  tons  of  pig  lead  a  year, 
and  might  be  called  the  "  Calumet  and  Hecla"  of  lead  mines. 

The  total  production  of  lead  from  this  district  to  the  end  of  1919  has 
been  approximately  2,650,000  tons,  presumably  from  about  65  to  70 
million  tons  of  crude  ore.  Of  this  the  St.  Joseph  Lead  Co.  has  con- 
tributed 1,460,000  tons  and  paid  about  $26,700,000  in  dividends.  It 
will  be  noted  that  the  dividends  have  averaged  almost  exactly  the  same 
amount  as  was  stated  in  the  first  edition,  i.e.,  $19.00  per  ton. 


SOUTHEAST  MISSOURI 

ST.  JOSEPH  LEAD  COMPANY  AND  SUBSIDIANIES 
COST  OF  OPERATING  DECEMBER,  1914 


375 


Production  and  value 

Total 

Pounds 
recovered 

Tons  ore  mined 

137  469 

Tons  ore  milled  

133  599 

Lb.  wet  concentrates 

16  568  360 

Lb.  pig  lead  equivalent  

10,318,622 

Lb.  wet  flotation  product.  .  . 

995  340 

Lb.  pig  lead  equivalent  

•  407,398 

Lb.  wet  slime   

97,800 

Lb.  pig  lead  equivalent  

42,653 

Total  pig  lead  equivalent  

10,768,673 

78   34 

Estimated  value  at 

$389  039  85 

Cost  of  production 

Cost  ton 

Prospecting  .... 

$10,494  45 

0  076 

Mining 

87,843  31 

0  639 

Ore  freights  '.  
Suspension 

11,934.56 
5,388  75 

0.087 
0  039 

Milling  
General  and  indirect  operating 

45,945.56 
38,927  92 

0.334 

0  284 

Depreciation 

26,296  55 

0  191 

Interest  .                        .            . 

25,868.39 

0  188 

Discount 

13,406  73 

0  098 

Total  cost  ore  to  concentrates 

$266,106  22 

$1  936 

Other  costs  and  incomes 

Cost  cwt. 

Freights  (concentrates  and  pig  lead)  

$11,237.03 

0.1043 

Smelting  costs 

69,662  55 

0  6469 

Selling  costs  

1,756.30 

0.0163 

Total  cost  of  product 

$348,762  10 

3  2387 

Cost  per  ton  smelted  about 

$7  50 

Total  Shifts  Worked  64.724.  Output  per  Shift  in  all  Departments,  Mining,  Rail- 
road and  Smelter  2.15  Tons. 


CHAPTER  XXI 

SILVER-LEAD  MINING 

GENERAL  REMARKS  ON  THE  SILVER-LEAD  MINES  OF  THE  CORDILLERAS — THEIR  IDENT- 
ICAL ORIGIN — CGEUR  D'ALENE  MINES — ECONOMIC  FEATURES — WAR^NER  VEIN — 
BUNKER  HILL  AND  SULLIVAN — CANYON  CREEK  1908 — LATER  HISTORY — HECLA — 
HERCULES — SMELTING — DECLINE  OF  FEDERAL  MINING  AND  SMELTING — BROKEN 
HILL  PROPRIETARY — PARK  CITY  IN  1908 

General  Remarks  on  the  Silver-lead  Mines  of  the  Cordilleras.— 

Idaho  and  Utah  have  for  two  decades  yielded  about  half  the  lead  of 
the  United  States.  Twenty  years  ago  a  mining  engineer  would  have 
described  the  respective  occurrences  as  very  di  Jerent;  now,  by  virtue 
of  the  generalizations  of  such  geologists  as  Lindgren,  Kemp,  and  Ransome 
he  is  bound  to  recognize  that  they  originated  in  a  common  process. 
In  every  case  some  connection,  direct  or  inferred,  may  be  traced  to 
igneous,  generally  granitic  intrusions.  Solutions  flowing  from  enclosed 
magmas  have  deposited  metallic  compounds  in  the  covering  rocks  into 
which  they  escaped  and  through  which  they  traveled  along  any  available 
channel.  In  Utah  the  rocks  which  received  the  deposits  thus  formed 
were  moderately  tilted  limestones  and  quartzites  of  Paleozoic  age,  and 
the  outer  periphery  of  certain  of  the  granite  masses;  in  the  Coeur  d'Alenes 
the  rocks  were  Algonkian  sediments  of  great  thickness  thrown  into  rather 
sharp  folds.  In  Utah  the  solutions  rising  perhaps  from  the  magma  through 
a  fissure  frequently  were  able  to  find  pervious  beds  along  which  they 
proceeded  great  distances,  irregularly  but  persistently  depositing  ores 
in  long  ribbons.  Such  bodies  are  almost  invariably  in  limestone  beds, 
but  in  no  case  is  any  bed  the  invariable  or  sole  locus  of  deposition.  The 
association  of  the  ores  with  the  limestones  is  not  inherent  but  accidental. 
There  will  be  various  beds  in  which  ores  will  be  deposited  merely  in 
proportion  to  the  extent  to  which  those  beds  were  accessible  to  the  solu- 
tions. The  only  invariable  fact  is  the  emergence  of  the  ores  from  the 
magmas.  Every  district  shows  a  group  of  phenomena  essentially 
equivalent  to  that  of  every  other  district.  Practically  every  metal  is 
found  in  some  proportion.  Frequently  the  same  district  (Bingham  for 
instance),  contains  deposits  valuable  here  for  copper,  there  for  zinc, 
elsewhere  for  lead;  somewhere  else  for  silver,  gold  or  manganese;  some- 
times for  several  metals  at  onc3.  Some  such  deposits  are  disseminated 
in  large  volumes  of  rock,  sometimes  chiefly  in  fault  fissures,  sometimes 
in  beds,  sometimes  in  or  along  the  walls  of  dykes,  sometimes  at  the  con- 
tacts of  batholithic  masses  with  various  rocks;  sometimes  within  the  body 

376 


SILVER  LEAD  MINING 


377 


of  the  batholith,  sometimes  in  the  zone  of  contact  metamorphism  that 
surrounds  it;  sometimes  in  fresh  unaltered  rocks  far  beyond  such  a  zone. 
The  nature  of  such  a  deposit  is 
not  governed  by  the  rock  or 
the  fissure  in  which  it  occurs, 
but  by  the  volume  and  energy 
of  the  mineralizing  flow  and  the 
distance  from  the  source  of  that 
flow.  Apparently  the  deposi- 
tion of  certain  minerals  was  de- 
ermined  by  the  progressive  loss 
of  temperature  by  the  emerg- 
ing solutions.  A  little  reflection 
on  this  point  will  enable  one  to 
see  that  during  the  process  of 
mineralization  the  factors 
governing  such  changes  might 
vary  greatly:  fresh  fissures 
might  be  opened,  and  old  ones 
closed,  by  earth  movements 
such  as  must  invariably  take 
place  around  either  an  emerging 
or  a  cooling  magma;  the  batho- 
lithic  action  itself  might  be  re- 
newed, or  be  intermittent,  and 
new  supplies  of  magmatic 
waters  might  be  given  off  with 
varying  energy  and  tempera- 
ture from  time  to  time.  Thus 
we  may  see  that  almost  at  the 
same  place  deposits  with  con- 
siderably different  characters 
may  be  formed  in  different 
phases  of  the  same  mineraliza- 
tion. One  deposit  sometimes 
carries  a  good  deal  of  copper  as 
well  as  lead  and  silver,  while 
another  a  few  hundred  yards 
away  will  carry  the  lead  and 
silver  but  no  copper.  One  may 
imagine  that  the  first  might 
have  been  formed  by  a  hot  gush 
of  solution  emerging  from  the  magma  at  an  earlier  or  later  stage  than 
the  second,  or  the  latter  might  be  fed  from  a  fissure  which  tapped  the 
magma  at  a  greater  distance. 


378  THE  COST  OF  MINING 

In  general  silver-lead  deposits  are  not  found  within,  or  in  immediate 
contact  with,  the  batholithic  masses,  but  copper  deposits  frequently, 
indeed  generally,  are.  In  a  silver-lead  mine  zinc  frequently  increases 
markedly  in  proportion  to  lead  at  greater  depths.  From  such  facts  the 
inference  is  made  that  copper  is  probably  deposited  at  higher  temperatures 
than  zinc;  zinc  than  lead,  lead  than  silver,  etc.,  but  while  this  general 
succession  is  t  recognizable  the  detail  will  be  frequently  confused  in  a 
manner  explicable  by  the  preceding  paragraph. 

In  various  parts  of  the  Coeur  d'Alene  district  there  are  mines  of  cop- 
per, zinc  and  silver,  lead  and  silver,  silver  only,  and  gold  only.  The 
zonal  occurrence  seems  to  hold  good  pretty  accurately  except  for  the 
copper  which  is  confined  to  the  eastern  part  of  the  district  several  miles 
from  the  exposed  granitic  stock.  But  who  knows  that  there  are  not 
unexposed  granitic  masses  beneath  these  copper  veins? 

The  simplest  relationship  of  the  silver  lead  veins  to  the  batholith 
may  be  seen,  or  figured  out,  in  the  Canyon  Creek  part  of  the  district. 
The  granite  appears  on  the  ridge  between  Canyon  Creek  and  Nine  Mile 
Creek.  The  granite  stock  seems  to  have  nearly  a  perpendicular  contact 
with  the  sedimentaries  on  its  east  side,  and  cuts  across  some  folds  in- 
discriminately. Beginning  at  the  north  there  are  the  following  principal 
lodes;  Hercules,  Tiger-Poorman,  Hecla,  Standard-Mammoth,  Frisco, 
Morning  and  Gold  Hunter.  All  these  lodes  show  the  following 
peculiarities. 

1.  They  lie  in  unmetamorphosed  sedimentaries  of  great  thickness. 

2.  They  occur  in  a  zone  which  fringes  the  granitic  stock. 

3.  Their  general  course  is  nearly  at  right  angles  to  the  major  axis 
of  the  stock. 

4.  The  deposition  is  entirely  in  fissures  and  does  not  spread  out  along 
beds. 

5.  The  ores  are  found  in  greatest  abundance  where  the  veins  traverse 
quartzites   (Burke  and  Revett)   rather  than  in  the  dense  clay  slates 
(Pritchard). 

6.  There  is  a  decided  tendency  for  zinc  to  increase  in  depth. 

7.  There  is  reason  to  believe  that  the  top  of  the  ore  shoots,  as  originally 
deposited,  corresponds  to  the  present  altitude  of  about  6000  ft.  above  sea 
level.     The  Tiger-Poorman  and  Helena-Frisco  veins  showed  strong  out- 
crops of  ore  near  the  bottom  of  the  Canyon  Creek  valley  at  elevations 
between  3000  and  4000  feet.     The  Hercules,  Mammoth  and  Morning 
showed  extremely  meager  outcrops  of  ore  at  elevations  between  5000  and 
6000  ft.     It  is  doubtful  if  the  Hecla  lode  had  any  outcrop  of  ore.     The 
crest  or  summit  of  the  ore-shoot  seems  to  lie  below  the  surface  at  an 
elevation  of  about  4500  ft.     It  may  be  noted  that  this  ore  shoot  is  further 
from  the  granite  stock  than  any  of  the  others.     An  apparent  exception 
to  this  is  the  case  of  the  Morning  and  Gold  Hunter  lodes;  but  acid  dykes 


SILVER  LEAD  MINING  379 

are  found  near  those  mines,  a  fact  that  leads  to  the  suspicion  that  the 
granite  mass,  or  an  off-shoot  from  it,  is  not  far  below.  In  confirmation  of 
this  suspicion  is  the  fact  that  the  Morning  and  Gold  Hunter  carry  a 
great  deal  of  zinc.  However,  a  branch  vein  on  the  Hecla  property 
known  as  the  Ore-or-no-go,  which  may  be  older  than  the  real  Hecla 
lode,  carries  a  good  deal  of  zinc  quite  near  the  surface. 

8.  There  is  reason  to  believe  that  the  vertical  range  of  commercial 
silver-lead  deposition  in  any  one  lode  is  limited  to  about  4,000  ft.  More- 
over it  is  entirely  conceivable  that  all  the  principal  veins  have  had  ore 
over  about  that  range.  The  Helena  Frisco  and  Tiger-Poorman  lodes 
which  became  unprofitable  at  depths  of  less  than  2, 000  feet  below  their 
present  outcrop  may  have,  indeed  probably,  once  extended  2,000  ft. 
above  that  outcrop. 

The  Wardner  part  of  the  district  is  20  miles  away.  How  far  all  these 
generalizations  may  apply  to  it  is  hard  to  say.  No  granitic  mass  is 
exposed.  But  the  mineralization  is  identical  and  the  habrtTof  the  veins 
identical.  The  great  practical  question  is  the  vertical  range  of  the  ores, 
which  we  may  suppose  will  be  different,  certainly  as  to  present  altitude. 
If  the  expectation  of  life  of-  the  Bunker  Hill  lode  is  limited  to  a  vertical 
range  of  4000  feet  it  is  still  uncertain  what  the  life  will  be  because  how  far 
it  once  extended  above  the  outcrop  cannot  be  known. 

In  a  general  way  the  expectation  of  future  output  from  veins  now  being 
worked  in  the  Cceur  d'Alene  field  thus  seems  to  be  limited  by  facts  proven 
by  experience,  but  to  draw  the  conclusion  that  profitable  operations  will 
have  ceased  at  any  date  that  can  now  be  fixed  is  not  warranted.  One 
may  say  this  confidently  on  the  basis  of  experience.  Such  an  extensive 
field  may  be  counted  on  for  fresh  discoveries,  if  not  in  the  way  of  new 
veins  at  least  in  the  way  of  branches,  or  extensions,  or  overlooked  por- 
tions, of  old  ones.  But  that  is  hardly  all.  It  seems  legitimate  to  draw, 
from  the  generalizations  of  ore  occurrence  given  above,  the  inference  of 
two  possibilities  in  which  might  lie  the  discovery  of  brand  new  silver- 
lead  mines. 

1.  Explorations  within  the  zone  of  known  productive  lodes  at  ap- 
proximately the  level  of  greatest  productivity.     About  the  only  space 
I  know  of  in  the  Canyon  Creek  field  where  this  exploration  is  not  covered 
by  tunnels  already  driven  is  that  between  the  Morning  and  Hecla  mines, 
where  the  surface  is  higher  than  the  level  reached  by  known  ore-shoots. 
A  tunnel  driven  across  this  space  at  an  elevation  of  about  3000  feet 
might  cut  veins  which  do  not  reach  the  surface.     Some  mineralization 
in  subsidiary  cracks  parallel  to  the  principal  veins  has  been  found  as  far 
as  openings  have  been  made. 

2.  In  the  region  between  Nine  Mile  and  Wardner  some  of  the  veins 
which  contain  only  silver  where  exposed  might  carry  silver-lead  at  a 


380  THE  COST  OF  MINING 

lower  horizon.     This  is  a  bald  speculation  based  on  the  zonal  theory 
of  ore  deposition. 

The  external  factors  which  affect  mining  in  the  Cceur  d'Alene  are  the 
most  favorable  of  the  whole  Rocky  Mountain  region.  The  altitude  is 
moderate,  the  climate  mild;  timber  and  water  power  are  abundant  and 
cheap.  Transportation  to  consuming  centers  is,  however,  expensive, 
and  wages  are  high.  Labor  is  efficient  and  abundant.  The  mines  are 
generally  deep,  measured  from  the  surface,  but  the  configuration  of  the 
country  has  permitted  their  attack  by  adit  levels;  so  that  most  of  the  ore 
has  not  needed  hoisting  from  great  depths,  and  pumping  operations 
have  generally  been  inexpensive. 

The  internal  factors  are  favorable.  The  veins  are  typical  fissures. 
The  ore  is  galena,  which  seems  to  be  a  metasomatic  replacement  of  pre- 
existing veins  of  iron  carbonate.  Ransome  believes  that  the  Burke  and 
Revett  quartzites,  flaggy,  evenly  bedded,  light-colored  rock  about  3,000 
ft.  thick,  contain  nearly  all  the  payable  ore,  although  veins  are  found 
traversing  an  immense  mass  of  slates  and  quartzites  of  presumable 
Algonkian  age,  some  over  and  some  under  the  productive  formations. 
The  whole  sedimentary  series  is  estimated  to  have  a  thickness  of  13,000 
ft.1 

The  ore  shoots  are  persistent  and  profound,  with  a  thickness  varying 
from  8  to  100  ft.,  and  a  length  varying  from  100  to  1000  ft.  normal  to  the 
plunging  axis.  Single  bodies  have  produced  5,000,000  tons  or  more.  The 
ore  in  the  main  has  to  be  concentrated.  The  proportion  shipped  to  the 
smelters  varies  from  a  quarter  to  a  tenth  of  the  amount  mined.  Of  the 
proportion  shipped  a  considerable  amount  is  picked  out  by  hand  either 
underground  or  at  the  mill,  the  lower  grades  being  concentrated.  In 
addition  to  the  sorting  of  first-class  ore,  there  is  a  still  larger  sorting  of 
waste  in  the  stopes.  In  many  cases  it  is  necessary  for  safety  to  fill  the 
stopes,  and  in  all  cases  it  is  economical  to  reject  waste.  The  various 
mines  differ  greatly  in  the  amount  of  sorting  and  filling  done.  Several 
have  run  for  years  without  shipping  any  first-class  ore  and  wihout  sort- 
ing any  waste  in  the  stopes,  everything  mined  being  sent  to  the  con- 
centrator. On  the  other  hand,  one  prominent  mine,  the  Hercules,  ran 
several  years  without  a  mill,  shipping  only  fir^t-class  ore. 

1  Perhaps  all  the  statements  in  these  two  paragraphs  need  some  modification 
through  the  developments  of  the  past  ten  years.  It  is  probable  that  neither  the  wages 
nor  the  average  capability  of  the  miners  is  any  longer  comparatively  high.  Nor  are 
many  of  the  mines  accessible  wholly  by  tunnels.  The  veins  are  the  same  as  ever  but 
they  are  being  worked  at  levels  1000  or  1500  feet  deeper  than  ten  years  ago. 

It  is  now  quite  clear  that  while  the  rocks  in  which  the  ore  is  found  is  of  Algonkian 
age,  the  veins  are  post-Cretaceous.  The  granite  batholith  from  which  the  veins 
spring  and  which  they  surround  is  no  doubt  part  of  the  same  movement  that 
produced  the  great  batholiths  of  Butte  and  of  Central  Idaho  as  well  as  many  smaller 
ones  in  this  region.  The  ore  deposits  therefore  belong  to  the  Eocene  "revolution" 
like  those  of  Butte,  Cripple  Creek,  Clifton,  Ariz  ,  and  many  others. 


SILVER  LEAD  MINING  381 

Producing  Mines. — The  mines  may  conveniently  be  divided  into 
two  groups:  the  Wardner  and  the  Canyon  Creek.  In  Wardner  there  is 
only  one  important  mine:  the  Bunker  Hill  &  Sullivan. 

The  Wardner  district  used  to  be  described  as  one  vein,  but  that  idea 
has  been  proved  long  ago  to  be  a  mistaken  one.  There  are  not  only  a 
number  of  different  veins  but  two  or  three  systems  of  veins  of  different 
ages.  It  can  hardly  be  said  that  the  mineralization  is  greatly  diferent 
in  the  various  systems  but  I  suppose  one  familiar  with  the  ores  might 
tell  them  apart. 

The  largest  ore  bodies  are  along  the  Bunker  Hill  lode,  which  is  a 
mineralized  fault  of  considerable  displacement.  One  group  of  such  ore 
bodies,  perhaps  better  described  as  one  large  shoot,  occurs  on  the  foot- 
wall  side  of  the  main  fissure,  a  second  large  group,  not  quite  so  persistent 
as  the  first,  on  the  hanging  wall  side.  It  used  to  be  supposed,  by  the 
way,  that  there  was  one  universal  "footwall"  fissure  for  the  whole  dis- 
trict; but  it  appears  that  the  eastern  part  of  this  supposed  "footwall"  is 
merely  an  older  vein  which  is  cut  and  displaced  a  considerable  distance 
by  the  Bunker  Hill  fault.  Another  set  of  veins  called  the  Jersey  system 
is  also  cut  by  this  fault,  almost  at  right  angles.  Some  of  these  veins  are 
highly  productive  and  valuable. 

It  is  perhaps  safe  to  conclude  that  all  the  mineralization  came  from 
the  same  source  but  that  the  location  of  deposition  was  changed  two  or 
three  times  by  the  opening  of  fresh  fissures.  In  this  respect  it  is  very 
much  like  ths  Butte  district. 

The  mining  is  done  almost  wholly  by  the  filling  method.  Whether 
square  sets  are  put  in  first  and  then  filled,  or  whether  the  stopes  are  filled 
without  timbering,  depends  on  the  firmness  of  the  ground.  This  varies 
in  different  parts  of  the  mines.  In  nearly  all  cases  enough  waste  for  the 
filling  can  be  sorted  out  of  the  vein-stuff  itself. 

The  Bunker  Hill  mine  in  twenty-two  years  up  to  June  1,  1908,  had 
produced  as  shown  in  the  following  table : 

1908  22  years 

Average  yield  per  ton  crude  ore,  lead  per  cent. 9.8  9.68 

Ounces  silver 3.84  3.82 

Average  contents  of  shipping  product,  lead  per  cent 43. 17  51 .45 

Silver,  ounces 16.58  20.31 

It  will  be  observed  that  while  the  yield  of  the  crude  ore  per  ton  is 
almost  exactly  the  same  as  for  the  entire  period  the  grade  of  the  shipping 
product  has  dropped  about  15  per  cent.  No  significance  attaches  to  this 
except  that  in  recent  years  a  considerable  tonnage  of  low-grade  concen- 
trates containing  less  than  10  per  cent,  lead  and  a  high  percentage  of  iron 
has  been  shipped  on  account  of  its  favorable  fluxing  qualities.  In  earlier 
periods  no  such  ore  was  shipped.  Of  course  with  the  present  grade  of 
shipping  ore  the  cost  per  ton  will  be  considerably  different  for  smelting 
charges  than  with  the  higher  grade  of  past  shipments. 


382 


THE  COST  OF  MINING 


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[  silver,  oz  

Average  New  York  daily  market  prices 

Average  New  York  market  prices  \  le 
when  products  sold  \  si 
Gross  assay  value  of  ore,  dollars  
Tailing  loss  in  concentrating,  dollars.  . 

Net  value  of  ore,  dollars  
Cost  of  mining,  dollars  
Cost  of  tramming,  dollars  
Cost  of  concentrating,  dollars  
Cost  of  general  expenses,  dollars  

Total  operating  costs,  dollars  
Cost  of  betterments,  etc.,  dollars  
Cost  of  shipping,  smelting,  and  ma 
in  smelting)  

Total  costs  of  every  kind,  dollars.  .  . 
Mining  profit,  dollars  
Other  earnings,  dollars  

Total  profits,  dollars  
Dividends,  dollars  

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The  operating  details  of  the  Bunker  Hill  and  Sullivan  were  given  in 
great  detail  in  the  first  edition.     Although  no  abrupt  changes  in  costs 


SILVER  LEAD  MINING 


383 


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took  place  until  1917  the  scale  of  output  gradually  increased  so  that  the 
details  for  1908  no  longer  seem  to  have  enough  interest  to  make  it  worth 
while  to  retain  them.  In  their  place  I  now  insert  more  recent  statistics. 


384 


THE  COST  OF  MINING 


KELLOGG  OPERATIONS 
MINING  1917  AND  1916 

The  mine  was  in  operation  for  the  full  period  of  twelve  months  and  produced  492,617  tons  of  con- 
centrating ore  and  413  tons  from  exploration  at  a  cost  of  $1,176,074.56,  as  follows: 


Details  of  labor 

and  supplies 

Total  for 
1917 

Average  cost 
por  ton  for                   1916 
the  year 

Superintendent  and  Foremen  

$       11,101.50 

$0.023 

$0  .  023 

Shift  Bosses  

19,571.72 

0.040 

0.042 

Machinemen  

66,802.72 

0.136 

0.166 

Chuck  Tenders  

24,245.07 

0.049 

0.079 

Miners  

89,480.25 

0.181 

0.191 

Shovelers  

178,292.73 

0.362 

0.354 

Carmen  and  Trammen  

21,144.68 

0.043 

0.034 

Motormen..  

10,565.42 

0.021 

0.024 

Timbermen  and  Carpenters 

88,839.15 

0.180 

0.151 

Hoistment  and  Skipmen  .... 

16,783.42 

0.034 

0.037 

Pumpmen  

5,503.80 

0.011 

0.010 

Pipemen  

1,559.31 

0.003 

0.003 

Nippers  '.  

6,342.00 

0.013 

0.010 

Supplymen  

21,936.17 

0.044 

0.042 

Repairmen  

4,966.04 

0.010 

0.009 

Timekeeper  

2,096.50 

0.004 

0.004 

Contractors  

5,126.70 

0.011 

0.003 

Concretemen  

245.25 

0.001 

0.008 

Miscellaneous  

\      .       1,242.72 

0.002 

0.003 

Powder.  

46,753.60 

0.095 

0.108 

Fuse  and  Caps  

9,152.18 

0.019 

0.020 

Illuminants  

3,233.83 

0.007 

0.008 

Lubricants  

1,086.02 

0.002 

0.002 

Timber  and  Lagging  

113,361.93 

0.230 

0.227 

Miscellansous  Supplies  

52,565.41 

0.106 

0.102 

Cement  

92.65 

0.006 

Machine  Shop  Repaiis.,     .  . 

20,094.06 

0.041 

0.041 

Electrical  Repairs  

7,931.02 

0.016 

0.017 

Building  Repairs  

i             3,962.99 

0.008 

0.008 

Tool  Shop  Repairs  

7,039.40 

0.014 

0.015 

Electric  Power  

14,172.05 

0.029 

0.025 

Compressed  Air  

44,065.20 

0.090 

0.086 

Electric  Light  

153.60 

Heating  

;             5,910.19 

0.012 

0.014 

Surveying  

7,435.85 

0.015                     0.018 

Train  Service  

:             6,899.35 

0.014                     0,015 

Teaming  

155.52 



Tramming  Ore  

25,304.80 

0.051 

0.052 

Tramming  Men  into  Mine  .  . 

1,357.71 

0.003 

0.003 

Tramming  Supplies  into  Mine  2,102.75 

0.004 

0.004 

Contingent  Expense  

26,076.52 

0.053 

0.046 

Legal  Services  

2,601.50 

0.005 

0.032 

Depreciation  

41,106.84 

0.084 

0.085 

Administrative  Expense  .... 

43,629.93 

0.089 

0.082 

Free  Light,  Water  and  Rent 

43,629.93 

0.089 

0.082 

Taxes  and  Insurance  

84,849.26 

0.017 

0.123 

Fire  Protection  

223.56                

Total  Normal  Expense  .  . 

.     $1,147,851.07 

$2.328                    $2.333 

Litigation  and  Other  Extraordinary  Expense  28,223.49 

0.057                     0.031 

Total  

•...  .1   $1,176,074.56  i          J2.385                    $2.364 

The  above  mining  costs  have  been  subdivided  under  the  following  heads,  viz.:   Exploration,  Stoping, 
Tramming,  Hoisting,  Pumping  and  General  Mine  Expense,  the  details  of  which  are  below  reproduced. 


SILVER  LEAD  MINING  385 

Total  cost 

Exploration 1524  feet  $30,579       $20. 06  per  foot 

Stoping 493,030  tons        779,589  1 . 58  per  ton 

Tramming 493,030  tons          28,765  0. 06  per  ton 

Hoisting 448,843  tons          25,253  0.06  per  ton 

Pumping 448,843  tons          20,734  0. 05  per  ton 

General  expense 493,030  tons        291,150  0.  59  per  ton 

The  total  of  all  these  items  is  the  mining  cost  given  above  with  details 
of  labor  and  supplies. 

Concentrating 493,030  tons     $295,964  $0. 66  per  ton 

Shipping 102,911     "           23,402  .23    "      " 

Grand  total  mining  and  milling 1,495,436  $3 . 03  per  ton 

MILLING  DATA 

Days  ran 355 . 70 

Tons  milled ' 493,030 

Assay  feed,  per  cent,  lead 10. 6496 

Assay  feed,  ounces  silver 4. 317 

Contents  feed,  tons  lead 52,506.318 

Tons  concentrates 103,981 . 84 

Average  assay  concentrates,  per  cent,  lead : 45. 1967 

Average  assay  concentrates,  ounces  silver 16.2794 

Contents  concentrates,  tons  lead ' 46,996.449 

Per  cent,  extraction  lead 89 . 51 

Contents  feed,  ounces  silver 2.128,436. 87 

Contenst  concentrates,  ounces  silver 1,692,765. 17 

Per  cent,  extraction  silver 79. 54 

Value  feed $10,878,283.04 

Value  concentrates $4,943,782 . 37 

Economic  extraction,  per  cent 45.44 

Tons  milled  per  24  hours 1,386.08 

Tons  concentrates  produced  per  24  hours 292.33 

Tons  lead  produced  per  24  hours 132 . 12 

Cost  per  ton  milled $0. 600 

Cost  per  ton  concentrates $2 . 846 

SEGREGATED  COSTS  FOR  1917  [EXPLORATION,  ETC.] 
GENERAL  COST  STATEMENT 

1916  Per  ton 

„  ,        .  concentrates 

lo  production  COStS  produced 

Mining— 475,784  tons  mined $14.74  $1,124,773.10 

Milling— 475,784  tons  milled 3.75  286,069.71 

Shipping  expense — 75,963.96  tons  concentrates  shipped          0 . 25  19,064 . 92 
Smelters'  Charge 

Freight  and  treatment  and  lead  and  silver  discounts 

(on  ore  shipped) 38 . 74  2,955,221 . 15 

To  south  mill  expense 0. 14  10,644. 12 

To  north  mill  expense 0. 14  10,728. 60 

To  north  mill  experimental         0.39  29,420. 75 

To  mine  examinations .• 300  00 

To  Bunker  Hill  Smelter  expense  at  San  Francisco 0 . 02  1,255 . 23 

Total  operating  costs $58 . 17  $4,437,477. 58 

25 


386 


CO^T7  OF  MINING 


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SILVER  LEAD  MINING  387 

It  appears  further  that  the  costs  incurred  on  the  ground,  i.e.,  omitting 
smelting  costs  and  losses  were  $3.13  per  ton  crude  ore  mined  and  $19.58 
per  ton  of  concentrates.  These  costs  were  not  increased  in  the  following 
year  which  is  surprising.  In  1917  the  cost  on  the  ground  was  per  ton 
crude  $3.16  and  per  ton  concentrates  14.96.  The  decline  in  the  cost  of 
concentrates  was  due  no  doubt  to  the  increased  yield. 

This  summary  shows  that  on  the  average  the  net  smelting  costs  and 
deductions  have  been  about  43  per  cent,  of  the  total  value  recovered  at 
the  mine :  that  the  operating  profit  is  about  55  per  cent,  of  the  net  smelter 
returns  and  32  per  cent,  of  the  gross  value;  that  out  of  30,000,000  ob- 
tained from  operating  and  other  profits  only  $20,500,000  was  paid  in 
dividend — 68  per  cent.  The  remaining  profits  have  been  absorbed  of 
course  in  purchase  of  property,  construction  of  plants  and  in  working 
capital.  We  may  summarize  the  whole  history  as  follows: 

7,886,886  tons  cost  for  operating $20,700,000  =  $2 . 62  per  ton 

for  capital 9,500,000  =   1 . 20  per  ton 


Total  for  31  years $3 . 82  per  ton 

The  capital  requirements  have  been  increased  considerably  since 
1915  by  the  construction  of  a  smeltery  at  Kellogg.  This  means  a  good 
deal  additional  for  working  capital,  the  total  of  which  stood  at  the  end 
of  1917  at  about  $3,000,000  net. 

The  mine  is  thought  to  be  good  for  a  long  life,  although  only  3,457,000 
tons  or  about  7  years  life  is  reported  in  sight.  The  mine  is  2600  feet 
deep  vertically  and  perhaps  4000  feet  on  the  slope;  but  the  ore  has  not 
changed  its  character  appreciably  from  top  to  bottom. 

Canyon  Creek. — The  Canyon  Creek  mines  differ  from  the  Wardner 
mines  only  in  the  shape  of  the  orebodies.  The  dip  is  not  far  from  ver- 
tical; the  ore  shoots  are  much  longer,  thinner,  and  more  regular.  Wages 

OPERATIONS  OF  THE  FEDERAL  MINING  AND  SMELTING  COMPANY  FOR  THREE  YEARS 

ENDING  1908 

Total  tons  mined  and  milled 2,428,112 

Tons  lead  in  shipping  product 166,912 

Ounces  silver  in  shipping  product 10,300,049 

Percentage  lead : 6 . 87 

Ounces  silver  per  ton 4 . 24 

Value  of  product ! $24,310,441 

Smelting,  refining,  and  deductions 10,514,773 

Net  value  to  mining  company 13,795 . 668 

Profits  reported 6,160,247 

Total  cost 7,635,421 

Cost  per  ton,  mining  and  milling  crude  ores. 3 . 14 

Cost  per  ton,  concentrates  shipped 22 . 03 

Smelting,  refining,  and  marketing  concentrates 30.35 


388 


THE  COST  OF  MINING 


average  46  cents  an  hour  (in  1908),  4  cents  higher  than  in  Wardner. 
Details  of  cost  are  not  given. 

It  will  be  seen  that  these  figures  indicate  conditions  similar  to  those 
of  Wardner.  Further  elaboration  of  detail  seems  unnecessary.  The 
costs  are  higher  than  at  the  Bunker  Hill,  but  the  difference  at  the  mine 
is  to  be  explained  by  the  factors,  (1)  higher  wages,  (2)  a  greater  amount 
of  hoisting  and  pumping,  (3)  a  charge  for  railroad  transportation  from 
mines  to  mills,  (4)  a  greater  number  of  power  and  mining  plants  to 
maintain,  and  a  higher  power  cost.  In  each  case  these  factors  are  in- 
herent to  the  problem  and  cannot  be  removed. 

The  cost  of  mining  and  milling,  of  construction,  of  freight  and  treat- 
ment; and  the  value  of  the  ore  to  the  mines,  free  from  smelter  deductions 
for  a  period  of  five  years  during  which  the  average  price  of  lead  in  New 
York  was  4.6  cents  and  of  silver  59.2  cents,  are  given  for  a  number  of 
properties  in  accompanying  tables: 

COST  AND  VALUE  OF  ORE  PER  TON  AT  Six  MINES  FOR  FIVE  YEARS 
(New  York  prices;  lead,  4.6c;  silver,  59.2c.)     1908. 


Tons 

Cost  mining 
and  milling 

Construction 

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Hecla  
Standard  

402,000 
1,244,571 
488,675 
924,416 
670,164 

$3.43 
2.91 
2.94 
1.96 
2.66 

$0.47 
0.15 
0.10 
0.15 
0.08 

$3.90 
3.06 
3.04 
1.22 
2.74 

$2.56 
2.37 
1.71 
2.51 
2.99 

$6.46 
5.43 
4.75: 
4.62 
5.73 

$9.57 
7.29' 
4.99 
5.42 
8.19 

$3.11 
1.86 
0.24 
0.80 
2.46 

Tiger-  Poorman  
Morning  

Last  chance  
Total  and  averages  

3,729,826 

$2.90 

$2.43 

$5.33 

$6.93! 

$1.60 

ESTIMATED  AVERAGE  VALUE  OF  CHIEF  ITEMS 

Smelter  deductions $1 . 50 

Loss  in  milling,  20  per  cent.     (In  some  of  these  mines  where  no  first- 
class  ore  is  shipped,  the  loss  is  probably  greater;  where  a  good  deal  is 

picked  out  the  loss  is  probably  less) 2.11 

Gross  value  of  ore  before  milling,  at  N.  Y.  quotations 10.54 

Per  cent,  lead,  before  milling '. 8 . 66 

Ounces  silver  per  ton,  before  milling 4.33 

Cost  to  mine  per  pound  lead  at  New  York 3 . 54  cents 

Cost  to  mine  per  ounce  silver  at  New  York 46  cents 

Cost  of  lead  in  New  York  (actual  cost) 3 . 36  cents 

Cost  of  silver  in  New  York  (actual  cost) 43 . 5  cents 

If  these  mines  were  all  owned  by  the  American  Smelting  and  Refining 


SILVER  LEAD  MINING  389 

Company,  and  the  cost  of  the  whole  process  from  mine  to  market  were 
to  be  given,  it  would  probably  be  something  as  follows: 

Total  value  recovered  per  ton $8 . 00 

Cost  of  mining,  milling,  and  construction 2 . 90 

Cost  of  smelting,  refining,  and  marketing 3 . 20 

Profit  per  ton 1 . 90 

These  were  the  facts  in  1909.  Since  that  time  the  Standard-Mam- 
moth, Tiger-Poorman,  and  Last  Chance  (Wardener)  mines  have  been 
worked  out  and  abandoned;  as  well  as  the  Success  mine  which  was  not 
mentioned  in  the  first  edition  but  which  was  a  resuscitated  old  mine 
that  ran  successfully  for  a  number  of  years.  Other  mines  like  the  Hecla 
and  Hercules  have  increased  their  output  enough  to  make  up  for  the 
decline  of  others,  and  one  new  vein,  the  Interstate-Callahan,  which 
produced  heavily  for  a  while,  was  discovered.  The  last  was  principally 
a  zinc  mine  but  it  produced  some  lead  and  a  good  deal  of  silver. 

The  Hecla  mine  has  improved  steadily  at  least  to  the  depth  of  1600 
feet  below  the  level  of  Canyon  Creek.  In  all  probability  the  deposits 
will  not  weaken  suddenly  with  increasing  depth,  but  very  likely  are 
approximately  lens  shaped  so  that  if  the  1600-ft.  level  is  that  at  which 
the  volume  of  ore  is  greatest  it  seems  reasonable  to  suppose  that  as 
much  ore  might  be  obtained  from  below  it  as  above  it.  Whether  the 
1600- foot  level  is  actually  the  best  in  the  mine  or  not  is  beyond  my 
knowledge;  but,  assuming  it  and  applying  the  above  theory,  we  get  the 
following: 

Amount  of  ore  mined  to  end  of  1918 2,400,000  tons 

Ore  in  sight  above  1600  ft.  level  end  of  1918 1,500,000 


Total  accounted  for  to  1600  ft.  level 3,900,000 

Add  for  presumed  lower  half 3,900,000 


Total  ultimate  production . .  , 7,800,000 

Deduct  production  to  date 2,400,000 


Future  expectation 5,400,000 

Rate  of  mining,  1917  and  1918  per  year 375,000  tons 

Length  of  line  at  that  rate,  less  than 15  years 

It  is  generally  believed  that  the  portion  of  the  Algonkian  series  of 
rocks  known  as  the  "Burke"  and  aRevett"quartzites  is  that  in  which 
the  silver-lead  veins  are  particularly  productive.  Some  mines  in  the 
district  are  thought  to  have  played  out  when  the  workings  reached  the 
underlying  "Pritchard"  slate.  If  this  theory  is  correct  the  Hecla  mine 
may  be  expected  to  go  to  a  great  depth,  for  the  Burke  quartzite  is  dip- 
ping nearly  vertically  into  what  is  probably  a  very  deep  fold  across  which 
the  vein  cuts  nearly  at  right  angles. 

Following  is  a  table  showing  the  progress  of  this  concern  in  the 
past  few  years; 


390 


THE  COST  OF  MINING 


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SILVER  LEAD  MINING  391 

The  cost  of  operating  the  Hecla  mine  in  1916  and  in  1918  was  as 
follows,  per  ton  raised; 

1916  1918 

Mining $1 . 901  $2 . 912 

Development 0 . 193  0 . 369 

Ore  sorting 0.163  0.228 

Permanent  improvements 0. 507  0. 807 

Miscellaneous  (Gen.  expense,  etc) 0. 250 


Total  for  mining 3 . 024  4 . 316 

Milling..  0.506  0.541 

Ore  transfer 0 . 106  0 . 133 


Gross  operating  expense $3 . 636         $4 . 990 

Note. — These  totals  do  not  agree  with  those  in  the  report,  probably 
because  the  tonnage  differs  in  different  operations.  The  gross  operating 
expense  in  1916,  not  including  improvements,  is  stated  at  12.958  and  in 
1918  at  $4.865 

The  Hercules  mine  has  the  following  interesting  record,  the  tonnage 
being  given  in  selected  crude  shipping  ore  and  concentrates: 

Tons  shipped 56,446 

Current  mining  and  milling  cost $10. 38  1 

Construction 13.64  /    $24  °2 

Freight  to  smelter : 11 . 15  1 

Treatment  charges 8.52J 


Total  cost $43 . 69 

Total  value  free  of  deductions 82 . 69 

Profit  per  tori 39 . 00 

This  mine  started  without  capital  and  created  its  plant  out  of  ore. 
It  is  interesting  to  note  how  this  affects  the  cost  of  mining  and  also  to 
compare  the  costs  with  those  of  the  Bunker  Hill  &  Sullivan  which  went 
through  the  same  process.  In  twenty  years  the  Bunker  Hill  mined  about 
3,400,000  tons  of  ore  out  of  which  it  built  up  its  plant,  paid  for  costly 
litigation  involving  its  very  life,  and  fought  several  disastrous  strikes 
at  a  cost  of  about  $1  a  ton  in  addition  to  its  current  operating  cost  of 
$2.60. 

If  the  Hercules  mined  one  ton  of  concentrates  to  four  of  crude,  its 
costs  were  for  five  years: 

Current  operating,  per  ton $2 . 60 

Cost  of  plant 3 . 41 

Doubtless  when  this  mine  shall  have  reached  the  age  of  the  Bunker 
Hill  its  cost  for  construction  will. have  diminished  to  about  the  figure 
attained  by  the  latter  company. 

This  mine  has  gone  on  successfully  during  the  period  since  the  preced- 


392  THE  COST  OF  MINING 

ing  paragraphs  were  written  and  has  now  become  a  complete  mining, 
milling  and  smelting  operation,  but  I  have  not  obtained  detailed  figures 
regarding  it.  There  is  no  reason  to  suppose  that  either  its  methods  or 
its  results  are  now  essentially  different  from  those  of  its  neighbors. 

In  the  first  edition  there  was  a  discussion  of  the  cost  of  smelting 
Coeur  d'Alene  ore  by  the  American  Smelting  and  Refining  Company. 
This  is  no  longer  pertinent  because  that  concern  no  longer  controls  the 
business  The  two  largest  silver-lead  producers  of  the  district,  namely; 
the  Bunker  Hill  and  Sullivan,  and  the  Hercles  with  its  allied  properties, 
have  each  built  smelteries  of  their  own,  the  first  at  Kellogg,  the  second  at 
Northport,  Washington.  It  is  evident  that  both  groups  have  seen 
advantages  in  doing  their  own  smelting. 

It  is  doubtful  if  such  advantages  are  wholly  financial.  It  is  a  natural 
desire  on  the  part  of  owners  of  property  to  have  full  control  of  it.  By 
the  reports  of  the  Bunker  Hill  and  Sullivan  we  learn  that  the  costs  and 
losses  incident  to  smelting  have  averaged  no  less  than  43  per  cent,  of  the 
gross  value  of  the  ore.  It  is  rather  difficult  for  a  concern  to  feel  independ- 
ent when  it  surrenders  so  large  a  part  of  its  business  to  others. 

I  think  we  may  discern  a  general  tendency  in  this  direction  which  has 
become  somewhat  stronger  in  the  past  ten  years  than  ever.  The  example 
was  set  about  twenty  years  ago  in  the  iron  business  when  the  smelting 
and  manufacturing  interests  bought  iron  mines  in  Lake  Superior  until 
they  obtained  presently  an  overwhelming  preponderance  of  them.  It 
seems  that  the  interest  which  demands  the  largest  investment  of  capital 
is  apt  to  control.  In  the  iron  business  the  great  preponderance  of  in- 
vestment was  in  the  transportation,  smelting  and  manufacturing ^ systems; 
the  mines  were  comparatively  cheap,  simple  and  easily  managed.  In 
other  forms  of  mineral  production  this  is  not  always  the  case.  Perhaps 
the  majority  of  lead  and  copper  mines,  that  is  such  as  are  large  enough  to 
make  a  venture  in  smelting  worth  considering  at  all,  have  vastly  more 
money  invested  in  their  mines  and  mills  than  the  value  of  a  smelting 
plant.  The  number  of  men  employed  in  the  different  departments  shows 
where  the  preponderance  of  effort  lies;  for  example  the  St.  Joseph  Lead 
Company  employs  2200  men  in  mining,  milling  and  transportation,  and 
only  350  in  smelting:  the  Phelps-Dodge  Corporation  more  than  6,000  in 
mining  to  1,300  in  smelting.  Very  likely  the  proportion  in  the  Coeur 
d'Alenes  is  about  the  same.  It  is  therefore  scarcely  to  be  expected  that 
43  per  cent,  of  a  business  should  be  left  to  an  outside  interest,  in  which 
the  relative  investment  and  effort  is  only  15  or  20  per  cent. 

On  a  pre-war  basis,  i.e.,  taking  the  average  price  of  lead  at  New  York 
at  4.5  cents  and  of  silver  at  57  cents  the  value  of  the  concentrates  pro- 
duced by  the  Bunker  Hill  and  Sullivan  was  about  $49.75,  of  which  43 
per  cent,  would  be  about  $21.  A  first  class  modern  smeltery  may 
perhaps  save  96  per  cent,  of  the  metals  in  bullion.  The  loss  therefore 


SILVER  LEAD  MINING  393 

would  be  about  $2  a  ton,  leaving  $19  for  the  actual  cost  of  smelting, 
refining  and  marketing,  by  contract.  But  with  a  private  smelter  the 
operating  cost  would  have  been,  according  to  Mr.  Ingalls,  something  as 
follows; 

Freight,  mill  to  smeltery? $0. 15 

Reduction  to  bullion 5 . 28 

Freight  to  refinery  43  per  cent,  of  $10? • 4 . 30 

Refining  43  per  cent,  of  8 . 67 .  .  3 . 73 


Total $13.46 

Apparent  profit,  say 5 . 50 

Whether  such  a  profit  is  actually  realizable,  or  is  realized,  depends 
upon  some  factors  which  I  have  not  been  able  to  analyse;  for  instance, 
the  cost  of  coke  and  fluxes  required  for  reduction  as  compared  with  the 
costs  of  those  things  at  the  points  where  the  American  Smelting  &  Refining 
Company  did  its  smelting,  and  also  the  correctness  of  the  freight  rates. 
I  have  no  positive  data  upon  which  to  base  an  opinion.  It  is  very  prob- 
able that  the  factors  upon  which  the  operations  of  the  new  smelters  is 
based  are  not  by  any  means  settled.  A  higher  level  of  prices  has  de- 
veloped in  all  departments,  making  higher  costs  for  transportation,  fuel 
and  refining  in  a  proportion  varying  from  60  to  100  per  cent. 

It  is  certain  that  in  the  case  of  the  Bunker  Hill  and  Sullivan  the  capital 
costs  to  be  charged  against  the  operating  profit  in  smelting  are  somewhat 
as  follows: 

Amortization  of  smelting  plant  on  say  20  years  life,  about  11 

per  cent  of  $1,500,000  is  per  year $165,000 

Use  of  $1,500,000  working  capital  at  6  per  cent 90,000 

Depreciation  charges   6  per  cent,   on  cost  of  smelting 90,000 


Total , $345,000 

The  cost  per  ton  of  concentrates  will  be  determined  by  the  number  of 
tons  treated.  At  100,000  tons  a  year  it  would  be  $3.45.  On  a  pre-war 
basis  such  a  capital  cost  would  be  high,  but  on  the  present  basis  it  does 
not  seem  so. 

FEDERAL  MINING  &  SMELTING  COMPANY 

This  concern  was  for  some  ten  years  the  largest  producer  of  silver- 
lead  ores  in  the  Cceur  d'Alene  district,  but  recently  it  has  been  in  a  state 
of  decline.  The  principal  object  of  describing  it  is  to  exhibit  an  example 
of  the  exhaustion  of  mines,  a  fate  which  is  often  put  off  in  a  manner  that 
disconcerts  one  who  expects  it,  but  which  comes  nevertheless.  A  group 
of  four  of  the  best  mines  of  the  district  has  now  dwindled  down  to  a 
single  survivor.  These  properties  had  the  following  history: 


394 


THE  COST  OF  MINING 


The  Last  Chance  group  at  Wardner  was,  about  1900,  a  bonanza 
mine  owning  a  portion  of  the  Bunker  Hill  lode  and  one  or  two  other  pro- 
ductive veins.  That  portion  of  the  mine  that  was  being  operated  actively 
was  worked  to  the  boundaries  and  finally  abandoned.  The  remaining 
unexplored  territory,  together  with  certain  pretensions  of  extralateral 
rights,  was  sold  to  the  Bunker  Hill  and  Sullivan  for  9  per  cent,  of  the 
stock  of  that  company.  This  sale  occurrred  in  1910. 

The  Tiger-Poorman  vein  at  Burke,  owned  wholly  by  this  company, 
became  unprofitable  at  a  depth  of  1800  feet  and  was  abandoned. 

The  Standard-Mammoth  lode,  on  which  were  the  openings  of  the 
Standard,  Mammoth  and  Greenhill-Cleveland  properties,  was  worked 
continuously  and  heavily  from  1892  -to  1917,  but  became  exhausted  at 
a  vertical  depth  of  about  4000  ft.  A  little  ore  perhaps  remains  in  the 
Greenhill-Cleveland.  The  total  production  of  this  lode  was  about 
5,000,000  tons  of  crude  ore  and  perhaps  800,000  tons  of  concentrates 
containing  450,000  tons  of  lead  and  over  40,000,000  ounces  of  silver. 
I  do  not  pretend  that  these  figures  are  accurate  but  give  them  merely 
to ."  present  an  idea  of  the  productivity  of  a  first  class  vein  in  this 
region. 

The  Morning  mine  is  still  being  worked.  The  ore  has  always  pre- 
sented some  difficulties.  It  occurs  in  great  volume,  but  has  been  low 
in  silver,  high  in  zinc,  difficult  to  concentrate,  and  wet.  The  mine  is 
now  very  deep,  about  3500  feet  vertically;  ventilation  is  difficult.  The 
total  output  to  date  has  been  about  5,000,000  tons  crude  and  this  will 
ultimately  rise  at  least  to  the  neighborhood  of  8,000,000  tons.  During 
the  war  years,  1916,  1917  and  1918  this  mine  was  able  to  earn  over  $1,000- 
000  a  year,  but  under  normal  conditions  the  profits  were,  and  may  be 
expected  to  be,  meager. 

The  total  output  and  profits  of  this  group  since  1909  is  shown  by 
the  table. 


Tons  crude  ore 

Tons  shipping 
product 

Price  of  lead 
per  pound, 
cents 

Profits 

Dividends 

1910 

741,650 

107,826 

3.885 

$743,807 

$839,027 

1911 

784,600 

118,315 

4.45 

1,241,115 

839,027 

1912 

836,947 

118,734 

4.35 

895,429 

749,131 

1913 

691,487 

84,533 

3.90 

883,448 

719,166 

1914 

421,631 

57,058 

3.50 

552,396 

599,305 

1915 

461,252 

66;610 

4.00 

310,367 

479,444 

1916 

Not  given 

137,390 

5.06 

868,198 

509,409 

1917 

728,539 

130,097 

6.10 

Not  given 

839,027 

8  years 

5,400,000 

appr.  820,563 

6,750,000? 

$5,573,536 

SILVER  LEAD  MINING  395 

In  these  statistics  no  account  is  taken  of  shipments  of  zinc  ore  except 
probably  for  the  two  last  years,  for  which  however  it  is  not  stated  separ- 
ately. In  a  general  way  we  may  compute  the  total  output  at  330,000 
tons  metallic  lead  and  about  17,000,000  ounces  silver.  The  value 
of  the  silver  would  equal  perhaps  125,000  tons  lead.  We  cannot  be  far 
wrong  therefore  to  conclude  that  approximately  450,000  tons  of  lead, 
or  its  equivalent,  yielded  about  $6,750,000  profit,  about  $15  per  ton. 
To  bring  the  profits  up  to  this  figure  the  exceptional  years  1916  and 
1917  have  to  be  included. 

But  in  this  connection  it  is  well  to  observe  that  the  company  never 
realizes  the  full  market  price  of  its  lead.  Through  its  contract  with 
the  American  Smelting  and  Refining  Company  it  receives  81  per  cent, 
of  the  market  price  up  to  4.1  cents  per  pound  and  above  that,  when  the 
price  rises,  one  half  the  additional.  It  was  against  terms  of  this  kind 
that  the  neighboring  companies  revolted  and  built  their  own  smelteries. 

BROKEN  HILL  PROPRIETARY 

This  great  company  is  no  longer  particularly  a  lead  producer.  It 
still  operates  its  mine  at  Broken  Hill,  but  chiefly  for  zinc  and  with  an  out- 
put of  only  about  160,000  tons  a  year  of  lead.  It  has  gone  into  the  steel 
business,  apparently  on  a  comprehensive,  but  from  the  American  stand- 
point rather  a  moderate,  scale.  In  15  years  ending  in  May,  1918  it 
treated  3,436,886  tons  of  tailings  by  flotation  and  recovered  853,364 
tons  of  zinc  concentrates.  Following  are  the  remarks  on  its  silver-lead 
business  that  appeared  in  the  first  edition. 

Costs  in  the  Broken  Hill  District. — For  an  interesting  comparison  let 
us  turn  from  the  Cosur  d'Alene  to  the  Broken  Hill  district  in  Australia, 
where  the  Broken  Hill  Proprietary  mine  is  by  far  the  greatest  lead-silver 
producer  in  the  world.  This  property  has  produced  in  eight  years  of 
which  reports  are  available  to  me,  4,001,969  long  tons  of  ore,  which 
yielded  398,470  long  tons  of  lead,  35,504,331  oz.  silver,  and  32,886  oz. 
gold.  Reducing  this  to  terms  of  short  tons  in  order  to  make  comparison 
with  American  mines  more  obvious,  we  have  4,482,202  short  tons, 
yielding  9.95  per  cent,  lead,  7.92  oz.  silver,  and  0.008  oz.  gold.  The 
cost  for  mining,  concentrating,  smelting,  refining,  marketing,  general 
expenses,  and  depreciation  has  been  exactly  $9  per  ton. 

The  cost  statements  issued  by  this  company  look  upon  the  whole 
operation  as  a  unit,  i.e.,  no  sharp  line  is  drawn  between  mining,  concen- 
trating, and  smelting.  As  nearly  as  I  can  judge,  however,  the  costs  per 
ton  for  the  year  1906  were  divided  as  shown  below. 

The  costs  seem  to  be  near  enough  the  average  to  give  a  fair  concep- 
tion of  the  general  results.  The  figures  covering  depreciation  are  ade- 
quate. About  $2,000,000  has  been  written  off  the  accounts  in  eight 


396  THE  COST  OF  MINING 

Short  tons  mined,  653,362 

Cost  of  mining  and  development $3 . 01 

Concentration 1 . 06 

Smelting,  refining,  and  marketing 3 . 86 

General  expense  and  depreciation 0 . 75 

Total $8.68 

years  and  the  whole  plant  of  this  great  concern  stands  on  the  books  at 
the  end  of  the  period  at  only  $1,933,575.  There  were  3,000,000  tons  of 
ore  then  developed. 

The  costs  of  this  mine  are  high,  owing  to  unfavorable  external-factors. 
The  climate  is  extremely  arid;  the  country  is  a  desert.  Fuel,  water, 
labor,  and  transportation  are  all  expensive.  As  a  good  example  let  us 
take  the  fuel  and  flux  account  which  amounted  to  $1.39  per  ton,  about 
twice  as  much  as  would  be  required  for  mining  and  smelting  the  same 
amount  of  Cceur  d'Alene  ore  at  the  points  where  the  work  is  done.  Mine 
timber  costs  30  cents  per  ton  mined,  twice  as  much  as  at  the  Bunker 
Hill.  These  figures  indicate  such  a  set  of  external  factors  as  to  explain 
why  it  costs  $4.07  per  ton  for  mining  and  concentrating  at  the  Broken 
Hill  against  $3  or  less  in  the  Cceur  d'Alenes.  The  internal  factors  for 
mining  are  good. 

On  the  smelting  side  we  find  that  the  proportion  to  be  smelted  is 
high,  being  one  ton  in  2.9,  against  one  ton  in  5.84  at  the  Bunker  Hill. 
The  actual  cost  for- smelting,  refining,  and  marketing  Broken  Hill  con- 
centrates is  $11.19  per  ton  smelted.  This  includes  freight  on  ores  from 
the  mine  at  Broken  Hill,  N.S.W.,  to  Port  Pirie,  which  is  $2.12  per  short 
ton.  It  does  not  seem  to  include  freight  on  bullion  from  Port  Pirie  to 
market.  Costs  mean  the  production  of  metals  ready  for  delivery  at 
Port  Pirie.  These  facts  seem  to  permit  of  the  following  comparison 
with  American  results  on  Cceur  d'Alene; 

Broken  Cceur 

Hill  d'Alene 

Freight  from  mine  to  smelter,  neglecting  moisture $2. 12  $8. 00 

Freight,  smelter  to  refinery 2 . 90 

Smelting \  5.28 

Refining /  3.99 

It  appears,  therefore,  that  for  equivalent  work  the  American  practice 
in  smelting  costs  about  the  same  as  the  Australian.  We  find  that 
Broken  Hill  ores  averaging  28.8  per  cent,  lead  cost  for  actual  smelting 
and  refining  $9.07  per  ton  against  $9.27  per  ton  for  smelting  and  refining 
Cceur  d'Alene  ores  averaging  46  per  cent.  lead.  The  freight  in  Ameri- 
can practice  performs  the  triple  function  of  bringing  the  ores  nearer  to 
bases  of  fuel  supply,  of  bringing  them  in  contact  with  other  ores  that  can 
be  profitably  smelted  in  conjunction,  and  of  bringing  them  nearer  the 
markets  where  they  are  to  be  finally  sold. 


SILVER  LEAD  MINING  397 

If  the  freight  items  are  to  be  neglected  entirely  the  comparison  is 
unfair  to  the  Broken  Hill  work,  because  that  company,  while  not  pay- 
ing freight  on  its  ore  beyond  Port  Pirie,  does  pay  freight  on  its  fuel  and 
other  smelting  supplies  to  Port  Pirie.  We  are,  therefore,  brought  to 
conclude  that  there  are  no  figures  for  determining  just  what  differences 
there  are  in  smelting  and  refining  costs  between  the  Broken  Hill  and  the 
American  works.  It  is  quite  plain  that  mining  and  milling  are  more 
costly  in  Broken  Hill  than  in  the  Cceur  d'Alene  and  that  for  this  the  un- 
favorable external  factors  of  the  Australian  desert  are  a  sufficient  ex- 
planation. 

Taking  the  average  cost  of  working  the  Broken  Hill  ores  at  $9  per 
ton  and  assuming  that  the  products  sell  in  the  proportion  of  3.15  cents1 
per  pound  for  lead,  and  60  cents  per  ounce  of  silver,  we  find  that  Broken 
Hill  ores  are  worth  $11  a  ton,  and  that  lead  during  the  period  reviewed 
has  cost  2.78  cents  per  pound,  silver  49  cents  per  ounce,  and  gold  $18 
per  ounce. 

Lead  and  Silver  from  Park  City,  Utah. — In  this  important  district 
there  are,  (1)  ore  deposits  in  fault  fissures,  and  (2)  replacement  deposits 
in  limestone.  Of  the  fissure  veins  worked  thus  far  only  one,  the  Ontario, 
has  been  remunerative.  It  seems  that  geologically  the  ores  are  all  of 
fissure  origin.  A  great  flat  formation  of  quartzite  is  overlaid  by  200 
ft.  of  limestone;  the  limestone  is  covered  in  turn  by  a  bed  of  soft  black 
shale.  Faults  traversing  the  formation  produce  fracturing  in  the  quart- 
zites  and  limestones,  and  form  channels  for  the  ready  circulation  of  water; 
in  the  shales  the  fissures  are  entirely  closed  up. 

The  result  is  that  the  mineralization  caused  by  waters  flowing  up- 
ward through  fissures  is  stopped  by  the  shale  and  compelled  to  seek  out 
lateral  channels  in  the  limestone.  Waters  of  this  origin  have  caused  the 
deposition  of  important  orebodies  in  the  limestones  and  quartzites.  The 
fissuring  has  served  to  facilitate  the  circulation  laterally  fully  as  much 
as  vertically.  In  some  cases  the  ultimate  source  of  the  mineralization  is 
unknown;  but  in  other  cases  the  flat  ore  shoots  in  the  limestone  were  fed 
from  the  Ontario  fissure. 

The  Ontario  mine  was  practically  worked  out  many  years  ago. 
i  nee  1893  most  of  the  ore  has  come  from  the  limestone  deposits.  Of 
hese  the  principal  mines  are  the  Daly- West,  the  Daly-Judge  and  the 
Silver  King.  These  mines  are  very  simi'ar.  The  orebodies  usually 
have  a  pitch  of  between  5  and  15°  from  the  horizontal,  and  are  from  50 
to  200  ft.  wide,  and  from  3  to  30  ft.  thick.  They  follow  fissures,  and 
hence  have  fairly  well  defined  courses  for  considerable  distances,  but 
they  frequently  leave  one  fissure  to  follow  another.  Where  the  lime- 
stone is  brecciated  at  the  intersection  of  fissures  the  orebodies  are  largest. 

1 1  have  assumed  4.6  cents  per  pound  as  an  average  price  for  American  lead.  The 
tariff  makes  the  difference. 


398  THE  COST  OF  MINING 

The  original  ore  was  a  mixture  of  sulphides  of  iron,  lead,  copper,  and 
zinc,  carrying  considerable  silver  and  some  gold.  Oxidation  has  effected 
an  important  rearrangement.  Nearest  the  surface  the  ores  are  lead 
carbonates  free  from  zinc;  lower  are  lead  sulphides  rich  in  silver,  but  free 
from  zinc;  lower  still  there  has  been  an  important  regeneration  of  zinc 
blende,  and  at  this  zone  the  ores  are  much  inferior  in  lead  and  silver 
content.  The  zinc  regeneration  is  immediately  above  the  unaltered 
sulphides;  these  are  sometimes  payable,  but  have  not  been  worked  much. 

Costs  at  Park  City  Mines. — A  great  deal  of  gangue  occurs  in  the  ore 
and  must  be  sorted  out.  At  the  same  time  much  of  the  ore  is  high- 
grade  and  cannot  be  improved  by  concentration;  one-third  to  one-half 
of  the  ore  mined  is  of  this  character.  Exploration  and  development  are 
expensive,  owing  to  the  dip  and  irregularity  of  the  orebodies.  These 
external  factors  make  the  costs  high. 

The  external  factors  are  about  the  average  for  the  Rocky  Mountain 
region. 

DALY-WEST  PRODUCTION  IN  SEVEN  YEARS,  1900-1906 

Crude  ore  shipped  direct 224,418 

Ore  milled 489,415 


Total 713,833 

Concentrates  shipped 97,634 

Total  shipments 322,052 


Lead,  73,942  tons,  at  $92 -. $6,800,000 

Silver,  17,167,000  oz.,  at  57  cents. 9,785,000 

Gold,  13,847  oz.,  at  $20.67 280,000 

Copper,  12,164,000  lb.,  at  15  cents 1,800,000 


Total  value $18,665,000 

$58  per  ton 

Freight,  treatment,  and  deductions $8,327,000  =  $25.83  per  ton 

Cost  of  mining  and  milling 13 . 72  per  ton 


Total  cost $39 . 58  per  ton 

Profit  per  ton  shipped 18 . 42 

RESULTS  PER  TON  MINED 
Average  value,  $28.40. 

Cost  of  mining  and  milling $6.26 

Milling  losses,  average  8  per  cent.1 2.24 

Freight,  smelting,  refining,  and  deductions 11 . 66 


Total  cost $20 . 16 

Profit  per  ton  mined 8 . 24 

1  See  explanation  below. 


SILVER  LEAD  MINING  399 

SUMMARY    OF    DALY-WEST    COSTS— 1900    TO    1906    INCLUSIVE 


Per  ton 
mined  and 
milled 

Per  ton  ore 
and 
concentrates 
shipped 

General  expense 

$0  42 

$  0  92 

Exploration  and  development  

0  60 

1  31 

Mining 

3  38 

7  40 

Milling  (Per  ton  milled  $1  .  36)  

1.00 

2.19 

Construction  

0  30 

0  66 

Shipping  and  selling 

0  56 

1  24 

$6  .  26 

$13.72 

One  may  indulge  a  little  skepticism  as  to  the  accuracy  of  these 
reported  savings  in  the  lead.  It  seems  that  the  ore  must  have  been 
assayed  for  lead  by  fire  assay  which  gives  inaccurate  results,  or  there 
must  have  been  errors  in  sampling  and  weighing.  I  prefer  to  believe 


Lead,  per  cent. 


Silver,  per  cent. 


1900 

92.00 

67.69 

1901 

92.87 

70.16 

1902 

93.00 

72.00 

1903 

97.9 

72.3 

1904 

99.00 

70.5 

1905 

99.5 

72.5 

1906 

98.44 

73.04 

that  the  saving  of  lead  was  about  the  same  as  that  reported  for  silver. 
We  may  lump  the  whole  mill  saving  roughly  at  75  per  cent.  On  this 
basis  the  mill  losses  would  be  about  8  per  cent,  of  the  entire  product. 

The  Daly-Judge  mine  is  west  of  the  Daly- West,  and  the  ore-bodies 
are  in  the  zone  of  zinc  regeneration,  or  in  the  original  sulphides  under- 
lying that  zone.  The  mine  has  not  been  very  profitable.  Attempts 
have  been  made  to  improve  the  mill  from  time  to  time  and  the  result 
has  been  a  considerable  cost  for  construction,  but  since  the  improve- 
ments do  not  seem  to  guarantee  future  earnings  the  construction  should 
probably  all  be  charged  to  operating. 


Six  YEAR'S  OPERATION,  DALY-JUDGE  MINE  (213,000  TONS) 


Lead,  19,375  tons 

Silver,  1,390,000  oz 

Gold,  4,800  oz 

Copper,  272,000  Ib 

Zinc,  8,614  tons 


Total  value . . 


$1,785,000 

792,000 

99,000 

41,000 

900,000 

$3,617,000 


400  THE  COST  OF  MINING 

Cost    of    smelting,    refining,    and    marketing    and    smelter    deductions 

/  total $1,845,000 

(losses) <  ^o  „„ 

\  per  ton . .  18 . 66 

Mining  and  milling  costs 7.27 

Probable  mill  losses .  .  3 . 00 


Total  costs  and  losses $18 . 98 

Profit..  1.00 


Total  value  of  ore  as  mined $19 . 93 

DETAILS  OF  COST  FOR  1907 

Mining $3 . 03 

,    Exploration  and  development 0 . 40 

Concentrating 0 . 95 

Shipping  and  selling 0 . 33 

General  expense 0 .  53 

Construction 0.21 

Total $5.45 

These  costs  are  lower  than  the  average.  During  the  period  under 
review  the  mine  was  shut  down  for  two  years  in  order  to  prosecute 
development.  Development  in  the  whole  period  has  averaged  about 
SI. 50  per  ton. 

The  Silver  King  is  a  rich  and  profitable  mine.  It  does  not  publish 
reports,  but  its  costs  are  approximately  $9.40  per  ton  mined  and  milled 
and  $15.50  per  ton  of  selected  ore  and  concentrates  shipped.  The  ore 
is  richer  than  the  Daly- West  in  lead  and  much  richer  in  gold,  but  about 
the  same  in  silver. 

The  Park  City  ores  present  the  following  factors  making  high  costs; 
(1)  Relatively  small  orebodies  that  must  be  followed  over  large  areas, 
thus  establishing  a  high  cost  for  exploration  and  development:  (2)  a 
careful  selection  of  the  ores  and  the  rejection  of  large  amounts  of  waste: 
(3)  a  large  percentage  to  be  smelted  and  a  very  high  charge  for  smelting. 

Smelting  Costs  Applied  to  Park  City  Ores. — Let  us  take  the  average 
ore  produced  by  the  Daly- West  mine  and  calculate  smelting  results  on  it, 
assuming  a  freight  rate  of  $1.50  per  ton  to  Salt  Lake  from  the  mines, 
and  prices  of  4.6  cents  per  pound  lead,  15  cents  per  pound  copper,  and 
60  cents  per  ounce  silver.  Let  us  assume  also  that  all  refining  is  done  at 
the  Atlantic  seaboard.  The  lead  and  copper  together  amount  to  almost 
exactly  25  per  cent,  of  the  ore. 

The  assay  of  shipping  product  is  as  follows: 

Gross  value 
New  York 

Lead 22 . 96  per  cent.  =  $21 . 12 

Copper 1.89  per  cent.  =       5.67 

Silver 53. 31  ounces  <     31.99 

Gold .....  .043  ounces  =      0 . 87 

$59.65 


SILVER  LEAD  MINING  401 

Freight  to  Salt  Lake  on  concentrates $1 . 50 

Freight  to  New  York  on  bullion  25  per  cent,  of  $10.80 2. 70 

Refining  25  per  cent,  of  $8 . 67 2.17 

Reduction  to  bullion 5 . 28 

Losses  3  per  cent,  silver 0 . 96 

6  per  cent,  lead 1.27 

33^  per  cent,  copper 1 . 89          4.12 


$15.77 

The  actual  deductions  for  freight,  treatment  and  losses,  were  $25.86 
per  ton,  so  that  we  must  estimate  a  profit  of  $10.09.  This  is  a  very 
different  result  from  that  obtained  in  the  case  of  Coeur  d'Alene  ores. 

Assuming  that  these  figures  are  not  far  from  the  truth,  and  assuming 
2.2  tons  mined  to  one  ton  shipped,  we  have  for  the  whole  problem  of 
silver-lead  ores  at  Park  City  the  following  mininum  costs  per  ton  mined, 
as  shown  by  the  experience  of  the  last  seven  years: 

Mining,  milling,  and  all  costs  to  mining  company $6.26 

Smelting,  refining,  and  marketing 7. 17 

Total $13.43 

Since  mill  losses  must  be  estimated  at  not  less  than  10  per  cent,  on 
low-grade  ores  and  smelting  losses  at  5  per  cent,  more,  the  actual  costs 
can  only  be  85  per  cent.*  of  the  original  value.  In  round  numbers,  there- 
fore, an  ore  in  Park  City  must  be  worth  $15  a  ton  before  there  can  be  a 
profit  in  it  for  anybody.  At  average  prices  this  figures  about  11  per 
cent,  lead  and  9  oz.  silver. 


CHAPTER  XXII 

THE  COST  OF  SILVER-LEAD  SMELTING1 

BLAST-FURNACE  OPERATION — ROASTING — COST  OF  SMELTING  PLANT — CALCULATION 

OF  INTEREST  AND  AMORTIZATION FUNCTIONS  OF  COPPER  IN  LEAD  SMELTING — 

FREIGHT    AND    REFINING — COST    OF    REFINERIES — AMERICAN    SMELTING   AND 
REFINING  COMPANY — HISTORY  AND  STATISTICS — TONNAGE  SMELTED — AVERAGE 

GRADE     OF    ORE GROWTH     OF    PROFITS DIVISION    OF    ORE   VALUE COSTS    AND 

CONTRACTS  ON  AVERAGE  ORE CONCLUSIONS  REGARDING  DERIVATION  OF  PROFITS. 

The  cost  of  smelting  and  refining  in  the  United  States  ranges  widely 
among  the  various  plants,  depending  upon  the  size  and  nature  of  the 
plant;  the  cost  of  labor,  fuel,  fluxes,  and  material;  the  character  of  the 
ores  smelted,  etc.  Thus,  nine  plants  during  the  same  period  of  six 
months,  a  few  years  ago,  showed  costs  of  smelting  referring  to  the  blast- 
furnace operation  only,  per  ton  of  charge  (ore  and  flux),  which  ranged 
from  $2.50  to  $4.80.  This  appears  in  the  following  list:  A,  $3.418;  B, 
$2.525;  C,  $3.260;  D,  $3.331;  E,  $3.754;  F,  $3.929;  G,  3.929;  H,  $4.039; 
I,  $4.781.  Average,  $3.607. 

In  the  treatment  of  the  argentiferous  ores  of  the  West,  the  present 
practice  is  to  roast  only  those  that  are  low  in  lead,  and  charge  raw  into 
the  blast-furnace  the  rich  galena.  The  cost  of  roasting  is  $2  to  $2.50 
per  ton  of  ore  roasted.  The  cost  of  smelting  a  ton  of  charge  in  a  large 
modern  plant,  under  favorable  conditions,  is  about  $2.50,  of  which  about 
84  cents  is  for  coke  and  $1.66  for  labor,  power,  and  supplies.  The  expense 
of  administration  amounts  to  about  16  cents  additional.  Consequently, 
the  total  cost  per  ton  of  charge  (ore  and  flux)  is  about  $2.66.  If  the  ore 
amounts  to  80  per  cent,  of  the  charge,  which  corresponds  to  the  ordinarily 
good  practice,  the  cost  per  ton  of  ore  is  about  $3.33. 

An  average  of  the  work  of  many  large  smelting  plants  shows  that  for 
every  ton  of  charge  smelted  in  the  blast  furnace,  about  0.4  ton  of  material 
(ore  and  matte)  must  be  roasted.  The  cost  of  roasting  ranges  from  $2 
to  $2.50  per  ton.  Taking  the  lower  figure,  in  view  of  economies  that 
have  been  effected  by  the  blast-roasting  process,  we  may  figure  that  on 
the  average  80  cents  is  to  be  added  to  the  cost  of  smelting,  making  the 
total  cost  per  ton  of  ore  about  $4.12.  Figuring  on  the  same  basis  of  80 
per  cent,  of  ore  in  the  charge,  the  average  for  the  nine  works  previously 
mentioned  would  be  $3.607  -f-  0.80  =  $4.50  approximately. 

J  This  article  is  a  condensation  of  one  published  originally  in  Eng.  and  Min. 
Jour.,  of  Aug.  15,  1908.  While  the  present  article  is  greatly  condensed  from  the 
original,  certain  points  have  been  amplified  and  figures  have  been  brought  up  to  date. 

402 


THE  COST  OF  SILVER-LEAD  SMELTING  403 

Interest  Charges,  Amortization,  etc. — Works,  capable  of  smelting 
1000  tons  of  ore  per  day,  or  roughly  330,000  tons  per  annum,  cost  nearly 
$1,000,000,  or  about  $3  per  ton  of  annual  capacity.  Reckoning  amortiza- 
tion at  10  per  cent,  per  annum,  and  interest  on  the  investment  at  6 
per  cent.,  the  smelter  must  add  48  cents  per  ton  of  ore  smelted  on  ac- 
count of  these  fixed  charges.  Moreover,  the  smelter  is  bound  to  carry 
a  large  stock  of  ore  on  hand.  Assuming  that  the  works  which  is  treating 
330,000  tons  of  ore  per  annum  has  always  30,000  tons  on  hand,  and  that 
the  average  value  of  the  ore  is  $30  per  ton,  the  interest  charge  on  each 
ton  of  ore  smelted  is  upward  of  15  cents.  A  month's  delay  in  realizing 
on  the  products  adds  15  cents  more.1  This  makes  a  total  of  $5.28 
up  to  the  production  of  base  bullion.  The  smelter  recovers  about  95 
per  cent,  of  the  lead  and  97  per  cent,  of  the  silver  in  the  original  ore. 
He  pays  the  miner  for  only  90  per  cent,  of  the  lead  and  95  per  cent,  of  the 
silver,  wherefore  he  has  a  certain  leeway  on  these  metals,  as  he  may 
have  also  on  gold  for  which  he  pays  the  miner  only  95  per  cent.,  but 
recovers  100  per  cent.2 

Copper. — Besides  the  gold,  silver,  and  lead  of  the  ore  there  is  a 
certain  amount  of  copper,  modern  practice  demanding  the  presence 
of  0.5  to  1  per  cent,  in  the  charge  in  order  to  insure  a  clean  slag.  This 
copper  goes  partly  into  the  slag,  and  partly  into  the  base  bullion  (from 
which  it  is  recovered  during  the  refining  process),  but  chiefly  it  is  ob- 
tained in  the  form  of  matte,  which  is  concentrated  up  to  about  40  per 
cent,  copper  and  then  is  despatched  to  Omaha,  where  it  is  converted 
into  blister  copper.  The  converting  of  this  leady  matte  is  more  costly 
than  the  treatment  of  ordinary  copper  matte,  and  indeed  throughout  the 
lead  smelting  process  copper  is  subject  to  high  losses,  especially  in  the 
slag  of  the  first  smelting,  which  follows  from  the  common  metallurgical 
principle  that  losses  are  quantitatively  constant  (or  nearly  so)  and  pro- 
portionately variable.  Consequently  in  the  treatment  of  an  ore  so  low 
in  copper  as  0.5  to  1  per  cent,  the  percentage  of  loss  is  large.  It  may  be 
generalized  as  30  per  cent.  It  is  for  this  reason  that  the  smelter  makes 

1  It  will  appear  subsequently  that  this  estimate  of  the  time  that  ore  and  crude 
metal   are  in  process  of  treatment  is  under,  rather  than  over,  the  average.     As  a 
matter  of  fact  smelters  roughly  figure  interest  on  the  basis  of  90  days. 

2  The   actual  extraction  of  lead  is  less  than  95  per  cent.,  but  in  good  practice 
it  is  95  per  cent,  on  the  basis  of  fire  assay,  on  which  much  of  the  ore  is  purchased, 
so  it  is  proper  to  figure  9.5  per  cent.     However,  this  is  drawing  it  rather  tightly  upon 
the  smelter,  and  considering  the  further  loss  of  1  per  cent;  which  the  lead  suffers 
in  refining  the  smelter  who  pays  for  90  per  cent,  of  the  lead  in  the  ore  does  not  obtain 
any  great  margin  on  this  item,  nor  does  he  on  the  purchase  of  the  silver.     The  smelter 
does  not  really  recover  100  per  cent,  of  the  gold,  although  he  may  apparently  do  so, 
and  even  more,  because  of  the  cumulative  effect  of  small  amounts  of  gold,  too  little 
to  figure  in  the  ore  settlements,  which  give  the  smelter  more  to  start  with  than  his 
books  show. 


404  THE  COS.T  OF  MINING 

so  large  a  deduction  from  the  copper  in  the  ore  (1.3  units  from  the  wet 
assay)  and  pays  for  it  at  3  to  7  cents  less  than  the  price  of  refined  copper 
at  New  York.  Of  course  it  will  be  understood  that  the  deduction  of 
1.3  units  pertains  to  ores  that  contain  sufficient  copper  to  deserve  pay- 
ment, and  that  those  ores  when  mixed  with  many  others  that  contain 
no  copper  give  an  average  furnace  charge  with  0.5  to  1  per  cent,  copper. 
It  may  be  explained  also  that  all  of  the  copper  does  not  finally  appear  as 
refined  metal,  a  fairly  large  quantity  being  obtained  and  marketed  as 
bluestone.  In  the  generalization  which  I  am  attempting  it  is  impossible 
to  go  far  into  these  details. 

Freight  and  Refining. — The  products  of  the  smelteries  are  base 
bullion  and  lead-copper  matte.  The  latter  goes  to  Omaha  for  con- 
verting and  the  blister  copper  thence  is  passed  on  to  Perth  Amboy  for 
refining.  The  base  bullion  goes  to  Denver,  Omaha,  Chicago,  and  Perth 
Amboy.  As  in  the  case  of  smelting  there  are  differences  among  these 
works  as  to  the  cost  of  refining  and  other  conditions,  but  inasmuch  as 
the  prices  for  lead  and  copper  are  based  on  the  market  at  New  York  it 
is  best  to  confine  attention  to  the  refining  and  handling  of  base  bullion 
at  that  center. 

The  freight  rate  on  base  bullion  from  Salt  Lake  City  to  New  York 
is  $10.80  per  ton;  from  Denver  and  Pueblo  to  New  York  it  is  $6.40  per 
ton.  The  cost  of  refining  is  $6  to  $6.50.1  Other  costs  are  lighterage, 
$0.625;  selling,  $0.40;  miscellaneous,  $0.325.  This  gives  a  total  of 
$7.60  exclusive  of  freight.  The  cost  of  a  lead  refinery  is  about  $6.66 
per  ton  of  annual  capacity,  on  which  amortization  at  10  per  cent,  and 
interest  at  6  per  cent,  come  to  $1.07,  making  the  total  cost  of  refining, 
lighterage,  selling,  etc.,  about  $8.67.  Consequently,  the  charges  on  a 
ton  of  ore  smelted  at  Salt  Lake  and  yielding  10  per  cent,  of  lead  are  as 
follows:  Smelting,  $5.28;  freight  on  bullion,  $1.08;  refining,  etc.,  $0.87; 
total,  $7.23. 

In  addition  to  this  total,  the  reports  of  the  American  Smelting  and 
Refining  Company  indicate  a  general  expense  amounting  to  25  to  40 
cents  per  ton  of  ore  smelted,  the  smaller  figure  being  achieved  in  the 
more  recent  years  Consequently  we  may  put  the  total  cost  of  smelting 
and  refining  at  about  $7.50  per  ton  of  ore. 

In  custom-refining  it  is  the  practice  to  pay  the  smelter,  i.e.,  the 
seller  of  the  base  bullion,  for  the  gold  at  $20  per  ounce;  for  the  silver 
at  the  New  York  price  less  1  cent  per  ounce  (this  is  98  per  cent  when 
silver  is  worth  50  cents  per  ounce) ;  and  for  the  lead  at  98  per  cent,  of 
the  New  York  price.  The  actual  extraction  of  lead  is  99  per  cent, 
The  loss  of  silver  is  so  small  that  it  may  be  disregarded  for  present 
purposes. 

1  At  Chicago  the  cost  is  only  $4,  and  under  favorable  conditions  lead  refining  should 
be  done  at  that  figure. 


THE  COST  OF  SILVER-LEAD  SMELTING 


405 


American  Smelting  and  Refining  Company. — The  reports  of  this 
company  throw  but  little  light  upon  the  subject  of  the  cost  of  smelting. 
Its  statement  of  assets,  gross  earnings,  profits,  etc.,  for  a  series  of  seven 
years,  is  given  in  the  accompanying  tables.  Before  proceeding  to  discuss 
these  figures,  it  is  important  to  make  certain  explanations.  In  each 
year  the  figures  are  for  the  fiscal  period  ending  April  30,  wherefore  the 
major  part  of  the  period  pertains  to  the  preceding  calendar  year.  The 
item  that  I  have  entered  as  " Repairs"  is  given  in  the  reports  of  the  com- 
pany as  "  Ordinary  Repairs  and  Betterments."  What  I  have  called 
" General  Expense"  includes  all  of  the  general  expenses  of  administra- 
tion, together  with  interest  and  taxes.  "Net  Earnings,"  so-called  by 
the  company,  are  evidently  not  properly  designated,  being  merely  the 
operating  profit.  The  true  profit,  or  actual  net  earnings,  appears  lat^r 
in  what  the  company  calls  "Net  Income."  Under  "Improvements," 
I  have  entered  what  the  company  calls  "Appropriation  for  Extraordinary 
Improvements  and  New  Construction."  From  the  uniformity  of  this 
account,  I  judge  that  it  represents  chiefly  the  new  construction  under- 
taken to  replace  worn-out  or  antiquated  plant;  in  other  words,  it  is  in 
this  way  that  the  company  makes  good  the  depreciation  of  its  property, 
which  otherwise  would  have  to  appear  in  an  amortization  account. 

Except  in  its  recent  statement  to  the  New  York  Stock  Exchange 
that  the  average  amount  of  ore  smelted  is  3,500,000  tons  per  annum, 
the  smelting  company  has  never  made  any  statement  of  its  production 
of  metals  or  amount  of  ore  smelted.  The  nearest  that  it  has  come  to 
communicating  this  important  information  was  in  the  report  for  the 
fiscal  year  ended  April  30,  1903,  wherein  it  stated  that  the  volume  of 
business  transacted  during  the  year  is  reflected  in  the  following  figures: 
Metal  content  of  ore  purchased:  gold,  1,025,132  oz.;  silver,62,389,438 
oz.;  lead,  492,960,350  lb.;  copper,  47,919,666  Ib.  Fuel  consumption: 
coal,  544,790  tons;  coke,  433,431  tons;  fuel  oil,  3,523,904  gal.  Freight 
traffic :  total  tonnage  moved,  4,434,484. 


Year 

1903 

1904 

1905 

Property  account  

$86,845,671 

$86,845,671 

$86,845,671 

Investment  account  

1,028,598 

1,680,306 

(a)  3,982,576 

Metal  stock  (Au.,  Ag.,  Pb.,  Cu.)  

18,010,687 

17,032,300 

16,418,543 

Material,  fuel,  flux  

1,107,253 

1,224,688 

1,118,902 

Cash.  .  . 

2,339,154 

4,047,423 

4,636,649 

Total  assets  

$109,331,362 

$110,830,387 

$113,002,340 

(a)  Does  not  include  177,510  shares  of  the  common  stock,  American  Smelters 
Securities  Company,  par  value  $17,751,000. 
(6)  Includes  $500,526  as  "net  current  assets." 


406 


THE  COST  OF  MINING 


Year 

1900 

1907 

1908 

Property  account  
Investment  account  

$86,845,671 
(a)  4,  179,  9  15. 

$86,845,671 
(a)  3,810,595 

$86,845,671 
3,950,088 

Metal  stock  (Au.,  Ag.,  Pb.,  Cu.)  
Material,  fuel,  flux  
Cash 

19,415,200 
1,114,893 
4,757,929 

18,251,587 
1,317,544 
6,706,984 

17,519,664 
1,380,742 
5,629,034 

Total  assets 

$116,313,607 

$116,932,381 

(6)$115,825,725 

II.       A.    S.    AND    R.    Co.       COMPABATIVE    STATEMENT    OF    INCOME    ACCOUNT 


Year 

1902 

1903 

1904 

1905 

1.  Earnings  

$7,038,682 

$9,403,711 

$9,425,443 

$10,506,683 

2.  Repairs 

791,306 

770,854 

818,141 

878,648 

3.  General  expense 

1,385,757 

1,056,786 

701,729 

729,224 

4.  Net  earnings  

4,861,619 

7,576,786 

7,905,573 

8,898,811 

5.  Employees'  fund 

91,254 

216,816 

6.  Improvements  
7.  Metal  account  
8.  Net  income  
9.  Dividends 

1,300,000 
3,561,619 
3  500,000 

655,683 
1,500,000 
5,421,103 
3,500,000 

597,582 
500,000 
6,716,737 
4,750,000 

425,289 
637,795 
7,618,912 
6,000,000 

10.  Surplus  for  year. 

61,619 

1,921,103 

1,966,737 

1,618,912 

11.  Total  surplus  

2,951,968 

4,873,071 

6,839,808 

8,458,720 

Year 

1906 

1907 

1908 

1.  Earnings  
2.  Repairs  

$11,665,886 

828  582 

$13,250,058 
976,535 

$9,403,282 
933,130 

3.  General  expense  
4.  Net  earnings  ... 

675,945 
10  161  358 

763,854 
11,509,669 

836,866 
7,633,287 

5.  Employees'fund  

449,204 

540,420 

Nil. 

6.  Improvements  .  . 

938  100 

1,054,996 

622,096 

7.  Metal  account  

Nil 

Nil 

Nil. 

8.  Net  income  

8  775  055 

9  914,253 

7,011,191 

9.  Dividends 

6  750  000 

7  000  000 

10.  Surplus  for  year.  .  .  . 

2  024  055 

2,914,253 

11,191 

11.  Total  surplus  

10,482,775 

13,397,028 

13,408,219 

Tonnage  of  Ore  Smelted. — These  data  enable  us  to  arrive  approxi- 
mately at  the  amount  of  ore  purchased,  and  we  may  assume  that  the 
amount  smelted  was  approximately  the  same.  It  is  a  fair  assumption 
that  the  ores  were  purchased  in  substantially  the  proportions  required 
to  make  a  suitable  smelting  mixture,  and  that  the  lead  content  was  in 
the  neighborhood  of  10  per  cent,  of  the  total  ore.  The  purchase  of 
246,480  tons  of  lead  would  therefore  imply  2,464,800  tons  of  ore.  Some 
of  the  copper  purchased  was  included  with  the  lead  charge,  but  some  was 


THE  COST  OF  SILVER-LEAD  SMELTING  407 

smelted  separately.  As  to  this  particular  I  can  do  no  more  than  surmise 
that  100,000  tons  of  copper  ore  may  have  been  smelted  separately,  and 
that  the  total  amount  of  ore  smelted  by  the  company  in  this  year  was 
about  2,564,800  tons.  It  will  appear  that  this  estimate  is  probably  not 
far  out  of  the  way.  In  1901  the  American  plants  of  the  company  alone 
were  smelting  at  the  rate  of  about  2,000,000  tons  of  ore  per  annum,  and 
from  that  time  onward  business  increased.  In  the  fiscal  year  ending 
April  30,  1903,  the  total  movement  of  freight  is  given  as  4,434,484  tons. 
Deducting  991,221  tons  for  fuel  (allowing  13,000  tons  for  the  oil)  and 
270,439  tons  of  lead  and  copper,  we  have  left  3,172,824  tons  for  ore  and 
limestone,  of  which  the  latter  would  normally  be  about  one-sixth,  deduct- 
ing which  there  remains  2,644,018  tons  for  ore.  There  is  some  traffic 
in  matte  and  other  products  from  one  works  to  another,  but  making 
allowance  for  such  duplications  and  overestimates  it  seems  not  unreason- 
able to  assume  2,500,000  tons  of  ore  smelted.  On  this  basis,  namely 
2,500,000  tons,  it  appears  that  the  total  actual  profit  to  the  company  in 
the  year  ending  April  30,  1903,  was  a  little  less  than  $2.20  per  ton  of  ore. 
Inasmuch  as  this  is  determined  by  making  the  tonnage  the  divisor  of  the 
whole  profit  of  the  company  and  it  is  not  to  be  doubted  that  even  in 
1902-03  the  company  was  making  handsome  returns  from  its  mercantile 
and  investment  accounts.  I  believe  it  is  reasonable  to  assume  that  its 
profit  in  smelting  properly  considered,  at  that  time  may  have  been  about 
$2  per  ton.  Mr.  Edward  Brush,  of  the  company,  before  the  Ways  and 
Means  Committee,  December  16,  1908,  stated  that  in  the  fiscal  year 
ended  April  30,  1908,  the  company  smelted  3,372,750  tons  of  ore.  The 
net  profit  in  that  year  was  $7,011,191.  Consequently  the  total  profit 
per  ton  of  ore  was  a  little  less  than  $2.08.  The  actual  smelting  profit 
was,  of  course,  something  less,  because  the  company  realizes  more  or 
less  from  its  various  ventures  that  are  not  to  be  referred  directly  to  its 
smelting  business. 

Average  Grade  of  the  Ore. — The  figures  given  for  the  fiscal  year 
ending  April  30,  1903,  also  convey  valuable  information  respecting  the 
average  metal  contents  of  the  ore  smelted  in  the  United  States  and 
Mexico.  Proceeding  still  on  the  assumption  that  the  total  tonnage  was 
2,500,000,  the  average  was  0.41  oz.  gold,  24.95  oz.  silver,  197.4  Ib.  lead, 
and  19.17  Ib.  copper.  The  substantial  accuracy  of  this  deduction  is 
confirmed  by  the  report  of  the  census  for  1904.  (The  census  confusingly 
designates  the  year  as  1905,  because  its  investigation  was  made  at  that 
time,  but  the  investigation  related  to  1904.)  According  to  the  census, 
the  amount  of  argentiferous  ore  treated  in  1904  was  2,271,724  tons, 
which  yielded  an  average  of  0.42  oz.  gold,  16.53  oz.  silver,  198  Ib.  lead, 
and  22.72  Ib.  copper.  It  is  to  be  remarked  that  the  figures  of  the  census 
relate  only  to  ore  smelted  in  the  United  States,  while  my  previous 
figures  have  included  the  ore  smelted  both  in  the  United  States  and  in 


408  THE  COST  OF  MINING 

Mexico.  Moreover,  the  latter  figures  are  for  contents  of  the  ore  pur- 
chased, while  the  census  figures  are  for  yield  of  the  ore.  However ,Hhe 
agreement  is  sufficiently  close  to  confirm  the  belief  that  my  estimate  is 
a  close  approximation. 

Another  interesting  deduction  may  be  made  from  the  statistics  of  the 
smelting  company  for  the  year  ending  April  30,  1903.  During  that 
period,  the  average  price  for  silver  was  50^  cents  per  ounce;  of  copper, 
12.452  cents  per  pound;  of  lead,  4.147  cents  per  pound.  Computing  ore 
of  the  average  grade  shown  for  the  year  ending  April  30,  1903,  on  the 
basis  of  100  per  cent,  of  the  metal  contents  at  the  average  New  York 
prices  for  silver,  lead,  and  copper,  and  $20.56  per  ounce  for  gold  (which 
is  what  the  United  States  Smelting,  Refining,  and  Mining  Company 
realized  for  its  product  in  1907,  although  the  coinage  value  of  gold  is 
$20.67  per  ounce),  it  appears  that  the  maximum  gross  value  of  this  aver- 
age ore  was  $31.54  per  ton,  itemized  as  follows:  0.41  oz.  gold  at  $20.56, 
$8.4296;  24.95  oz.  silver  at  50^  cents>  $12.5374;  197.3  Ib.  lead  at  4.147 
cents,  $8.1820;  19.17  Ib.  copper  at  12.45  cents,  $2.3867.  Total,  $31.5357. 
Having  already  shown  that  the  average  profit  per  ton  of  ore  smelted  in 
that  period  was  probably  about  $2,  the  actual  net  profit  to  the  smelter 
was  a  little  more  than  6J^  per  cent,  of  the  ore  value. 

Subsequent  Increase  in  Profits. — It  is  impossible  to  follow  analytic- 
ally the  subsequent  history  of  the  company  in  any  way  that  has  a  very 
sound  foundation.  The  reports  show  a  marvelous  increase  in  the  profits, 
which  were  $5,421,103  in  1902-03  and  $9,914,253  in  1906-07.  During 
this  period  of  four  years  the  amount  of  ore  smelted  by  the  company  in- 
creased greatly,  but  there  is  no  reason  to  surmise  that  it  increased  in  the 
same  ratio  as  the  profits:  indeed,  there  is  sufficient  evidence  to  warrant 
me  in  saying  positively  that  it  did  not,  and  that  if  the  tonnage  of  ore 
smelted  in  each  year  were  made  the  divisor  of  the  net  profits  reported 
the  quotients  would  be  steadily  increasing  up  to  the  last  year  or  two. 
However,  any  such  figuring  would  be  misleading,  because  the  company 
has  undergone  great  expansion  and  derived  greatly  increased  profits 
from  sources  that  are  not  properly  referable  to  the  direct  smelting  opera- 
tions. The  company  avers  that  it  has  not  increased  treatment  charges, 
and  there  is  much  evidence  in  support  of  that  assertion. 

Explanation  of  Increasing  Profits. — In  directing  attention  to  the 
subject  of  the  increasing  profit  shown  by  the  reports  of  the  smelting 
company,  it  is  important  to  consider  a  variety  of  conditions.  It  is  well 
known  that  it  is  much  more  economical  to  smelt  on  a  copper  basis  than 
on  a  lead  basis.  The  difference  in  favor  of  the  former  is  fully  $1  per  ton 
of  ore.  Consequently,  the  more  copper  ore  to  be  smelted,  the  more  the 
profit,  and  the  increasing  net  earnings  of  the  smelting  company  are 
doubtless  due  to  some  extent  to  the  increased  amount  of  ore  smelted  on 
the  copper  basis.  It  is  also  well  known  that  the  margin  on  ore  purchased 


THE  COST  OF  SILVER-LEAD  SMELTING  409 

in  Mexico  is  much  greater  than  on  American  ores,  and  a  large  part  of 
the  profit  of  the  smelting  company  is  derived  from  its  Mexican  business, 
which  has  been  rapidly  increasing.  The  lowest  margin,  probably,  is 
realized  by  the  smelteries  in  Colorado,  which  until  lately  have  treated  in 
the  neighborhood  of  1,000,000  tons  per  annum  and  operate  rather  uni- 
formly at  that  rate.  A  few  years  ago  the  profit  in  smelting  in  Colorado 
was  only  about  $1  per  ton,  and  probably  it  is  no  larger  at  the  present 
time.  It  is  claimed  also  that  the  profit  in  smelting  in  Utah  has  been 
only  about  $1  per  ton  since  competition  has  been  active  at  that  point. 
On  the  other  hand  the  profit  at  non-competitive  points  and  in  Mexico 
must  be  large. 

The  increase  in  the  earnings  of  the  smelting  company  has  also  been 
promoted  without  doubt  by  its  profit-sharing  system,  which  was  designed 
to  increase  efficiency  and  has  had  that  e^Iect.  The  company  has  bene- 
fited from  economies  in  administration,  as  is  clearly  shown  by  the  decreas- 
ing amount  to  the  account  of  general  expense.  Furthermore,  it  has 
derived  great  advantage  from  the  introduction  of  metallurgical  improve- 
ments, such  as  the  Huntington-Heberlein  process,  and  the  concentration 
of  operations  at  the  most  economical  plants.  Finally,  we  come  to  the 
question  of  metal  stock  account,  wherein  the  purchaser  of  ores  may  lose 
or  make  a  great  deal  through  fluctuation  in  the  value  of  the  metals.  In 
the  long  run  such  fluctuations  are  expected  to  balance,  and  temporary 
gains  or  losses  are  commonly  charged  to  an  account  representing  quota- 
tional  profit  or  loss.  In  a  long  upward  trend  of  prices,  a  buyer  of  ores 
may  realize  a  great  profit;  and  similarly  in  a  sharp  decline,  he  may  suffer 
an  immense  loss.  From  1901  to  the  end  of  1907  the  general  trend  of  the 
metal  markets  was  upward,  and  undoubtedly  the  greatest  factor  in  the 
increase  in  net  income  up  to  April  30,  1907,  was  the  appreciation  in  the 
value  of  metals  on  its  hands,  just  as  since  June,  1907,  its  net  income 
suffered  severely  from  the  decline.  The  company  carries  in  its  statement 
of  assets  an  item  of  "  metal  stock"  ranging  from  116,418,543  to  $19,415,- 
200,  which  represents  its  valuation  of  ores  and  metals  on  hand.  The 
nature  of  its  business  requires  that  large  quantities  of  ore  and  crude  metal 
be  in  stock  at  all  times.  It  appears  from  the  data  deduced  in  this  article 
that  the  stock  necessarily  carried  is  from  20  to  25  per  cent,  of  the  annual 
turnover;  in  other  words,  the  ore  and  its  products  are  in  process  of  treat- 
ment and  in  transportation  for  2J£  to  3  months. 

Division  of  Ore  Value. — Now  let  us  see  what  division  is  made  of  the 
value  of  an  ore  assaying  0.41  oz.  gold,  24.95  oz.  silver,  179.3  Ib.  lead,  and 
19.17  Ib.  copper,  which  was  the  composite  of  all  the  ore  bought  by  the 
American  Smelting  and  Refining  Company  in  1902-03.  The  smelter 
and  refiner  probably  realized,  from  this  ore  approximately  as  follows: 
gold,  0.41  oz.  at  $20.56,  $8.43;  silver,  24.95  oz.  X  0.97  at  50J£  cents, 
$12.16;  lead,  197.3  Ib.  X  0.94  at  4.147  cents,  $7.69;  copper,  19,17  Ib. 
X  0.7  at  12.45  cents,  $1.67.  Total,  $29.95. 


410  THE  COST  OF  MINING 

The  expenses  from  the  time  of  receipt  of  the  ore  at  the  smelting  works 
to  the  sale  of  the  refined  metals  are  approximately  as  follows: 

1.  Smelting,  1  ton  at  $4.50 $4  .•  50 

2.  Converting  40  Ib.  copper  matte  at  0.7  cents 0.28 

3.  Freight  on  190  Ib.  lead  bullion  at  0.43  cents 0. 82 

4.  Freight  on  13>^  Ib.  copper  bullion  at  0.5  cents -...."  0.07 

5.  Refining  190  Ib.  lead  bullion  at  0.38  cents 0. 72 

6.  Refining  13>£  Ib.  copper  bullion  at  0.7  cents 0.09 

7.  General  expense 0 . 40 

8.  Amortization 0 . 25 

9.  Tie-up  of  metals 0 . 30 

10.  Metal  account..  0.30 


Total $7.73 

1.  As  previously  computed.  3.  The  rate  of  0.43  cents  is  the  mean 
of  the  rates  from  Salt  Lake  and  Pueblo;  this  assumption  is  necessarily 
arbitrary.  4.  In  this  case  also  the  assumption  of  freight  rate  is  neces- 
sarily arbitrary.  It  is  intended  to  cover  all  freight  charges  on  copper 
from  the  time  of  leaving  the  first  smelter.  Copper  matte  goes  to  Omaha 
from  East  Helena,  Salt  Lake,  Denver,  Pueblo,  and  elsewhere — even 
from  Perth  Amboy — and  the  copper  bullion  thence  goes  to  Perth  Amboy. 
Probably  the  assumption  of  0.5  cents  per  pound  to  cover  all  of  this  move- 
ment is  too  low.  7,  8.  These  figures  are  deduced  from  the  reports  of 
the  American  Smelting  and  Refining  Company;  the  allowance  for  amorti- 
zation appears  to  be  too  low.  9.  As  previously  computed.  10.  This 
appears  to  be  the  average  allowance  that  has  been  made  by  the  American 
Smelting  and  Refining  Company,  as  insurance  against  depreciation  of 
metals  on  its  hands. 

Inasmuch  as  the  smelter  is  supposed  to  realize  a  profit  of  $2  per  ton 
of  ore,  the  total  deduction  for  its  account  must  be  $7.73  +  $2  =  $9.73, 
and  from  the  value  of  the  ore,  $29.95,  there  is  left  $29.95  --  $9.73 
=  $20.22  to  pay  for  the  ore  and  the  freight  upon  it  to  the  smelting  works. 

Now  let  us  see  how  that  would  figure  out  to  the  producer.  We  may 
assume  a  settlement  on  the  lines  of  the  following:  gold,  0.41  oz.  at  $19.50, 
$8;  silver,  24.95  oz.  X  0.95  X  50>i  cents,  $11.91;  lead,  197.3  Ib.  at  2 
cents,  $3.95;  copper,  19.17  Ib.  at  5.45  cents,  $1.04;  total,  $24.90;  deducting 
a  treatment  charge  of  $4.68  leaves  $20.22  as  the  net  value  to  producer. 
This  corresponds  to  an  ore  contract  reading,  "Gold  to  be  paid  for  at 
$19.50  per  oz.;  silver  at  95  per  cent,  of  the  New  York  quotation;  lead  at 
40  cents  per  unit;  copper  at  the  New  York  quotation,  less  7  cents  per 
pound;  treatment  charge,  $4.68  per  ton;  neutral  basis;  delivery  at  smel- 
ter's works."  This  has  a  familiar  sound,  except  that  so  small  a  percent- 
age of  copper  is  not  always  paid  for,  but  it  must  be  remembered  that  I 
am  here  figuring  on  a  composite  ore,  the  copper  of  which  is  obtained 
chiefly  in  special  classes  of  a  higher  average  of  all  ores  smelted. 


THE  COST  OF  SILVER-LEAD  SMELTING  411 

Conclusions. — -After  a  consideration  of  the  data,  it  is  impossible  to 
escape  the  conclusion  that  the  great  increase  in  the  net  earnings  of  the 
American  Smelting  and  Refining  Company  from  year  to  year  is  to  be 
attributed  to:  1.  Enlargement  in  the  volume  of  business.  2.  Institu- 
tion of  economies  (a)  in  administration;  (6)  through  centralization  of 
operations;  (c)  through  metallurgical  improvements;  (d)  through  increase 
in  operative  efficiency.  3.  Appreciation  in  the  value  of  metals,  due 
partly  to  natural  causes,  and  partly  to  manipulations  by  the  company. 
The  profits  on  exempt  lead,  and  on  contracts  with  the  producers  of  lead 
ore,  whereby  the  value  in  excess  of  a  certain  price  per  pound  is  divided 
between  the  producer  and  the  smelting  company,  must  contribute 
largely  to  the  treasury  of  the  company.  Since  the  middle  of  1907  the 
depreciation  in  the  value  of  metals  has  offset  some  of  the  gain  previously 
realized.  4.  Increase  in  the  amount  of  ore  smelted  on  the  copper  basis, 
which  is  more  profitable  than  the  lead  basis.  5.  Increase  in  earnings  of 
subsidiary  companies,  such  as  the  steamship  company.  6.  Earnings 
from  investments  of  surplus,  e.g.,  the  preferred  stock  of  the  American 
Smelters  Securities  Company.  7.  Profits  from  investments,  e.g.,  the 
sale  of  a  portion  of  its  holding  of  the  stock  of  the  United  Lead  Company, 
carried  into  earnings  for  the  year  ending  April  30,  1907. 

The  position  of  the  smelting  company  being  so  strong  in  many 
respects,  and  the  surplus  which  it  carries  being  so  large,  the  company 
may  be  forgiven  for  not  writing  off  anything  for  amortization  of  its  plants. 
As  I  have  previously  pointed  out,  the  outlay  made  on  account  of  extra- 
ordinary improvements  is  of  the  nature  of  an  amortization  account,  but 
the  amount  expended  so  far  in  this  way  is  of  doubtful  sufficiency.  The 
smelteries  and  refineries  now  owned  by  the  company  must  be  worth  in  the 
neighborhood  of  $15,000,000,  i.e.,  it  would  cost  that  amount  to  replace 
them.  The  average  amount  expended  for  extraordinary  improvements 
during  the  five  years  ending  with  Apjil  30,  1907,  was  a  little  less  than 
$750,000  per  annum,  which  is  only  5  per  cent,  of  the  physical  value  of  the 
plants.  This,  it  seems  to  me,  is  an  insufficient  allowance  for  amortization. 

According  to  the  statement  filed  by  the  company  in  the  New  York 
Stock  Exchange,  in  January,  1909,  its  smelteries  and  refineries  were  the 
following : 


412 


THE  COST  OF  MINING 

SMELTERIES 


Place 

Plant 

Furnaces 

Annual 
capacity 

Denver,  Colo  
Pueblo  Colo 

Globe  
Pueblo  

7 
t 

322,000 
328,000 

Pueblo  Colo 

Eilers. 

6 

295,000 

Durango,  Colo  
Leadville,  Colo  
Salt  Lake,  Utah  
East  Helena,  Mont  
Omaha,  Neb  
Chicago  111 

Durango  
Arkansas  Valley  
Murray  
East  Helena  
Omaha  
National  . 

4 
10 
8 
4 
2 

2 

146,000 
509,000 
523,000 
235,000 
82,000 
60  000 

Maurer  N  J 

Perth  Amboy. 

3 

140,000 

El  Paso,  Tex  
Monterey  Mex 

El  Paso  
Monterev 

10 
10 

492,000 
460,000 

Aguascalientes,  Mex  
Chihuahua,  Mex  

Aguascalientes  
Chihuahua  

10 
3 

720,000 
153,000 

86 

4,465,000 

REFINERIES 


Place 

Plant 

Lead, 
tons 

Copper, 
tons 

Gold  and 
silver,  oz. 

Omaha  
Chicago  
Maurer  

Omaha  
National  
Perth  Amboy  

156,000 
84,000 
66,000 

66,000 

36,000 
16,400,000 
36,000,000 

The  annual  product  of  the  refineries  is  about  as  follows :  gold,  1,250,000 
oz.;  silver,  66,000,000  oz.;  lead,  225,000  tons;  copper,  66,000  tons. 


CHAPTER  XXIII 


ZINC  STATISTICS 

Zinc. — A  resume*  of  the  progress  of  the  zinc  business  of  the  United 
States  in  recent  years,  covering  the  war  period,  is  obtained  from  the 
following  statistics  by  W.  R.  Ingalls,  Engineering  and  Mining  Journal, 
May  31,  1919: 

PRODUCTION  OP  SPELTER 
(In  Tons  of  2000  Ib.) 
By  Ore  Smelters  Only 


1914 

1915 

1916 

1917 

1918 

Arkansas  

7637 

25  701 

26  750 

Colorado  

8,152 

8,984 

8,908 

7,735 

3,897 

Illinois 

130  587 

161  665 

181  495 

176  071 

141  808 

Missouri-  Kansas  
Oklahoma 

53,424 
92  467 

111,052 
111  405 

154,396 
169  064 

86,505 
204  587 

31,834 
143  371 

Electrolytic  

10963 

27245 

38885 

East  and  others  (a)  

85,682 

114,036 

147,555 

154,567 

138,805 

Totals  

370,312 

507,142 

680,018 

682,411 

525,350 

(a)  Includes  Anaconda  and  other  electrolytic  production  in  1915. 

STATISTICS  OF  SPELTER-SULPHURIC  ACID  WORKS 
(In  tons  of  2000  Ib.) 


1914 

1915 

1916 

1917 

1918 

Ore  received  
Spelter  produced  
Sulphuric  acid,  basis  60  deg. 

434,666 
196,529 
355,424 

614,565 
244,252 
475,740 

752,021 
293,525 
683,514 

779,941 
313,433 
817,573 

485,276 
217,134 
636,149 

From  these  totals  it  appears  that  the  recovery  of  spelter  from  the  ores 
smelted  averaged  about  43  per  cent,  in  1914,  40  per  cent,  in  1915,  38  per 
cent,  in  1916,  43  per  cent,  in  1917  and  46  per  cent,  in  1918.  This  indi- 
cates that  in  years  of  slacker  demand  higher  grades  are  smelted,  lower 
grades  being  used  only  during  periods  of  sharper  demand.  We  may 
conclude  that  the  grade  of  ore  smelted  under  average  conditions  yields 
from  850  to  900  Ib.  spelter  and  if  the  recovery  averages  85  per  cent.,  the 
gross  content  is  from  50  to  55  per  cent.  Such  grades  of  course  can  only 
be  obtained  by  concentrating;  some  selected,  hand  picked  ores  no  doubt 
are  shipped  in  small  lots,  especially  carbonates  and  silicates,  but  the 

413 


414 


THE  COST  OF  MINING 


RECEIPTS  OF  ZINC  ORE 

(In  tons  of  2000  lb.     This  table  includes  the  receipts  of  ore  by  the  smelters  only  and  does  not  include 

the  production  of  ore  exported  or  what  was  taken  by  the  electrolytic  producers  or 

by  the  manufacturers  of  zinc  oxide.) 


State 

1913 

1914 

1915 

1916 

.1917 

1918 

9,347 

6,357 

14,718 

17,243 

14,837 

1,962 

1,500 

1,737 

.      7,017 

12,854 

20,225 

(c) 

6,796 

8,827 

27,445 

41,291 

12,444 

5,351 

Colorado  
Idaho            

220,166 
31,835 

164,739 
57,001 

148,359 

78,767 

194,418 
104,575 

184,304 

86,172 

82,995 
62,109 

Kentucky  
Missouri-Kansas  
Missouri-Kansas-Oklahoma- 
Arkansas 
Montana                           .    .    . 

441 
280,000 

(d) 
91,257 

434 
247,723 

(d) 
125,663 

1,863 
278,099 

(d) 
200,528 

2,460 
369,397 

(d) 
233,645 

2,019 
301,809 

(d} 
171,904 

799 
(c) 

476,954 
152,905 

Nevada 

22,313 

20,447 

24,949 

51,670 

35,045 

19,733 

New  Mexico 

14,593 

15,369 

37,042 

35,734 

16,353 

13,206 

Oklahoma 

23,500 

26,247 

25,231 

42,799 

153,035 

(c) 

Tennessee  

8,297 

18,708 

38,527 

43,309 

38,488 

45,924 

Utah  

27,073 

20,322 

21,535 

43,240 

21,381 

14,758 

Wisconsin  (c)  
Others  and  undistributed  

89,662 
57,241 

74,311 
57,936 

90,128 
122,490 

91,561 
111,273 

137,248 
192,393 

123,506 
98,870 

Totals  
Mexico  
Canada  

884,012 
19,965 
6,012 

845,821 
16,414 
10,532 

1,116,698 
49,171 
14,000 

1,395,4569 

142,687 
31,877 

1,387,657 
135,368 
21.502 

1,099,072 
49,532 
14,502 

Australia  .       .... 

68,448 

134,464 

37,031 

618 

Other  foreign         .    . 

9,211 

73,394 

31,714 

2,373 

Grand  totals  (6)  

909,998(6) 

872,767 

1,257,528 

1,777,891 

1,613,272 

1,166,097 

(a)  Including  Illinois  and  Iowa.  (6)  In  addition  to  the  ore  reported  from  Canada  and  Mexico,  zinc 
smelters  received  a  few  thousand  tons  from  Europe  and  Eastern  Siberia  in  1913.  (c)  See  "Missouri- 
Kansas-Oklahoma-Arklnsas."  (d)  See  under  separate  states. 

grand  total  of  such  shipments  must  be  small  and  their  effect  is  to  reduce 
the  average  grade  used  at  the  smelteries.  It  also  appears  that  nearly, 
or  quite,  a  ton  of  sulphuric  acid  may  be  obtained  from  a  ton  of  such  ore, 
although  presumably  the  purer  sulphides  are  selected  for  this  purpose. 

Zinc  Smelting. — It  will  be  seen  from  the  tables  that  between  a  third 
and  a  half  of  the  spelter  of  the  United  States  is  smelted  in  Oklahoma  and 
Kansas.  Natural  gas  is  the  fuel  and  the  occurrence  of  it  is  the  sole 
reason  of  existence  for  the  smelting  industry  in  that  region.  There  are 
three  types  of  zinc  smelting,  or  producing,  plants : 

1.  The  gas  fired  retort  plants  of  Oklahoma  which  live  on  the  advan- 
tages of  cheap  construction  and  cheap  fuel,  and  produce  sp'elter  only. 

2.  The  coal  fired  retort  plants  in  the  central  industrial  field  of  Illinois 
and   Pennsylvania.     These  establishments  are  much  more  costly  for 
construction,   less   economical  for  zinc   smelting  alone,  but  have  the 
advantages  of  a  more  pemanent  fuel  supply  and  better  facilities  for 
distribution.     The  last  factor  enables  them  to  engage  in  the  production 
of  sulphuric  acid  which  is  used  largely  in  galvanizing  iron  at  the  neigh- 
boring steel  plants,  but  is  also  the  chief  base  of  the  chemical  industry. 


ZINC  STATISTICS  415 

3.  Electrolytic  zinc  plants,  the  chief  of  which  is  that  of  the  Anaconda 
Copper  Co.  at  Great  Falls,  Montana.  The  sine  qua  non  of  this  opera- 
tion is  cheap  power.  A  significant  hint  of  the  competitive  strength  of 
this  process  is  contained  in  the  fact  that  the  great  Anaconda  plant  was 
shut  down  in  1919. 

1.  OKLAHOMA  PLANTS — PRE-WAR  CONDITIONS 

It  takes  about  65,000  cubic  feet  of  natural  gas  to  treat  a  ton  of  sul- 
phide ore.  When  this  gas  can  be  obtained  for  7  cents  a  thousand  cubic 
feet,  or  less,  it  becomes  a  desirable  basis  for  zinc  smelting.  When  gas 
can  be  obtained  for  4  cents  a  thousand  the  advantage  is  very  marked, 
not  so  much  in  the  cost  of  operating  as  in  that  of  constructing  this  kind 
of  a  plant.  Thus  a  given  margin  of  profit  on  the  ore'makes  a  much  more 
handsome  return  on  the  capital  invested  than  is  the  case  with  plants 
based  on  coal,  which  cost  three  or  four  times  as  much.  It  is  confessedly 
a  temporary  and  migratory  business  which  becomes  unprofitable  when 
the  available  supply  of  gas  runs  short,  or  goes  up  in  price,  but  if  the 
operation  will  last  five  years  with  gas  costing  say  5  cents  a  thousand,  the 
smelter  will  pay  for  itself;  and  so  long  as  these  opportunities  recur  it 
will  continue  to  be  a  good  business  to  build  cheap  plants  at  points  where 
sufficient  gas  may  happen  to  be  found.  How  long  such  points  may 
continue  to  be  discovered  is  uncertain  but  the  area  in  which  they  may 
foccur  is  very  considerable  and  I  do  not  imagine  that  the  end  is  yet  very 
near.  The  following  illustration  of  the  capital  required  to  install  and 
conduct  such  operations  throws  light  on  the  subject. 

Four  plants  in  Oklahoma  had  up  to  the  end  of  1918  a  fixed  capital  expen- 
diture of  about $3,000,000 

The  working  capital  at  that  date  was  about 3,000,000 


6,000,000 

The  maximum  capacity  was  380,000  tons  of  ore  per  year,  so  that  the 
fixed  capital  per  ton  was  about  $8.  In  1918  the  actual  tonnage  was  less 
than  half  of  the  maximum,  but  the  working  capital  was  the  amount 
stated,  say  $17  per  ton;  from  which  we  may  conclude  that  the  minimum 
capital  required,  fixed  and  current,  is  about  $25  per  annual  ton;  but  when 
the  output  is  curtailed  it  rises  as  high  as  $33  a  ton.  Perhaps  it  will 
average  about  $30.  The  operating  cost  was  about  $9.35  per  ton  of  ore 
in  1912  and  about  $22  a  ton  in  1919.  If  we  neglect  the  latter  figure  as 
one  belonging  to  a  period  of  economic  uncertainty  and  return  to  the 
more  secure  proportion  of  things  that  existed  before  the  war,  we  shall 
have  to  reduce  to  some  extent  the  estimate  of  capital  required,  especially 
the  working  capital,  nearly  in  proportion  to  the  operating  cost.  It  must 


416  THE  COST  OF  MINING 

be  remembered  that  although  the  ground-work  of  fixed  investment  of 
all  these  enterprises  existed  before  the  war  the  working  capital  is  pro- 
portional both  to  the  cost  of  operating  and  to  the  price  of  the  product, 
which  determines  the  amount  of  money  required  to  buy  ore  and  hold 
it  until  the  contents  are  disposed  of.  Thus  in  1912  (a  year  selected 
because  the  price  of  spelter  was  very  close  to  the  average),  the  figures 
were  about  as  follows : 

tons  treated 100,000 

Fixed  capital $900,000 

Working  capital $600,000 

Number  of  retorts 12,000 

Cost  fixed  capital  per  retort $75 . 00 

Cost  total  capital  per  ton  ore  treated 15  . 00 

Operating  cost 9.35 

Interest  on  capital 0 . 90 

Amortization  of  fixed  capital  in  10  years 0 . 60 


Total  estimated  cost $10. 85 

Operating  profit 4 . 99 

Actual  profit  as  per  estimated  costs 3 . 50 

Operating  return  on  total  capital  about  33  per  cent. 

Assuming  that  these  were  the  average  financial  and  operating  condi- 
tions on  the  ground  and  that  the  average  smelting  margin  was  deter- 
mined by  competition,  we  arrive  at  certain  conclusions  as  to  the  value  of 
zinc-ore. 

Average  price  for  year 5 . 66  cents 

Smelters  margin $  14 . 35 

Loss  in  smelting  130  pounds  at  5.66 ' .  .  .  7 . 36 

Total  margin  and  losses  on  the  ground 21.71 

Other  deductions  would  be  for  freight  and  these  would  be  determined 
partly  by  the  grade  of  the  ore  and  partly  by  the  distance  between  the 
mine  and  the  smelter.  Assuming  a  standard  Joplin  ore  running  60  per 
cent,  zinc,  the  freight  items  would  be  about  as  follows : 

Freight  on  1070  pounds  to  St.  Louis $1 . 61 

Freight  on  ore  to  smelter  and  loading 2 . 50 

Grand  total  of  deductions  about $25 . 80 

Value  of  zinc  in  ore,  1200  Ib.  at  5.66 68 . 00 

Margin  to  miner $42 . 20 

As  a  matter  of  fact  the  margin  to  the  miner  thus  calculated  is  very 
close  to  the  price  paid  for  ore  in  Joplin  for  the  period  in  question. 


STATISTICS 


417 


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418 


THE  COST  OF  MINING 


The  following   tables   show  the   production   of   the  United   States 
and  of  the  world. 


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ZINC  STATISTICS 
WORLD'S  PRODUCTION  OP  SPELTER,  1910-1916,  IN  SHORT  TONS 


419 


Country 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

Australia 

560 

1  904 

2  531 

4  105 

^    fi1  fi 

Austria  

14,666 

18,602 

21,609 

23  928 

Belgium  
Canada  

190,233 

215,050 

220,678 

217,928 

160,849 

56,940 

25,273 
a  2  974 

France 

b  54,456 

b  63  810 

b  71  669 

b  71  672 

Germany  

251,046 

276,008 

298,794 

312,075 

Great  Britain  
Holland  

69,531 
23,121 

73,806 
25,059 

63,860 
26,380 

65,197 
26,811 

c  56,000 
18,098 

c  50,000 
12,243 

c  67,000 

6  554 

23  421 

42  8QQ 

7,363 

8  959 

10  237 

c  21  000 

c  28  000 

r  3fi  OOO 

9.514 

10,952 

9  659 

8  389 

6  900 

2  300 

1  400 

Spain  

10,735 

6,981 

7,874 

6,617 

12,944 
2  535 

8,497 
o  466 

9,395 
11  020 

United  States 

269,184 

286,526 

338  806 

346  676 

353  049 

489  519 

667  456 

893,046 

986,061 

1,070,045 

1,093,635 

United  States  percentage 
of  world's  production  .  .  . 

30.1 

29.1 

31.7 

31.7 

a  Mineral  production  of  Canada,  1917,  Canada  Dept.  Mines,  1919. 

b  Obtained  by  subtracting  Spanish  production  from  Metallgesellschaft  total  for  France  and  Spain. 

c  Quints  Metal  Handbook  and  Statistics. 

The  following  table  should  be  noted  with  caution.  It  is  probable  that 
the  zinc  in  the  "zinc-lead"  and  " other"  ores,  while  no  doubt  recoverable, 
is  very  little  utilized.  It  is  interesting  because  it  shows  the  extent  to 
which  zinc  may  be  obtained  as  a  by-product. 

Zinc  smelteries  in  the  United  States  are  distributed  as  follows:  Elec- 
trolytic plants,  Montana  1,  Utah  1,  California  1,  Iowa  1,  Maryland 
1— total  5. 

Retort  plants:  Arkansas  3,  Colorado  1,  Illinois  11,  Kansas  17,  Mis- 
souri 3,  Oklahoma  14,  Pennsylvania  3,  West  Virginia  4,  Total  56.  Of 
this  13,  chiefly  in  Illinois,  Pennsylvania,  and  West  Virginia  operate 
sulphuric  acid  plants. 


420 


THE  COST  OF  MINING 


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Percentage  of  t 
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CHAPTER  XXIV 

ZINC  MINING 

SOUTHWEST     MISSOURI — MIAMI     DISTRICT — WISCONSIN     IN     1908 — BUTTE     AND 
SUPERIOR — INTERSTATE-CALLAHAN — CONCLUSIONS  ON  ZINC. 

Zinc  Mining  Statements. — I  have  not  been  able  to  secure  many 
statements  by  zinc-mining  companies  showing  the  same  outline  of  the 
business  that  can  be  secured  in  the  case  of  most  other  mining  enterprises. 
Through  a  certain  familiarity  with  the  business,  however,  I  am  able  to 
supply  a  perspective  of  results  in  some  of  the  more  important  fields  in 
the  following  sketches  of  zinc-mining  operations  of  Joplin  and  of  Wis- 
consin. At  the  end  of  the  chapter  will  be  found  some  generalized  state- 
ments of  the  cost  of  mining  ores  of  certain  assumed  grades  in  these 
districts.  As  a  matter  of  fact  there  is  no  such  thing  as  a  complete  zinc- 
mining  business  in  the  United  States  outside  the  operations  of  the  New 
Jersey  Zinc  Company,  which  is  apparently  one  of  the  most  secretive  of 
all  corporations.  The  product  in  general  is  obtained  through  the  com- 
bined, but  more  or  less  disjointed,  efforts  of  leasers  and  custom  smelters. 

THE  SOUTHWEST  MISSOURI  ZINC  DISTRICT  IN  1908 

This  district  produces  60  per  cent,  of  the  spelter  of  the  United  States, 
and,  therefore,  bears  nearly  the  same  relation  to  the  zinc  business  as 
Lake  Superior  mines  bear  to  the  iron  business  of  the  country.  Perhaps 
no  other  district  of  equal  importance  is  so  little  understood  by  outside 
mining  people. 

The  Joplin  field  is  a  very  extensive  one,  more  or  less  ore  having  been 
mined  over  an  area  of  perhaps  2000  sq.  m.,  but  within  this  extensive 
field  by  far  the  greater  part  of  the  production  has  come  from  three  or 
four  localities.  Of  these  the  most  important  may  be  called  the  Webb 
City  zone,  which  is  said  to  have  produced  about  one-half  of  the  entire 
output  of  the  field.  In  the  immediate  vicinity  of  the  city  of  Joplin, 
there  are  very  extensive  mineralized  zones  extending  in  a  northwest 
and  south  east  direction.  A  third  place  that  has  produced  extensively 
is  in  the  neighborhood  of  Galena,  Kansas.  I  shall  attempt  a  general 
description  of  these  orebodies  by  using  as  an  example  the  great  Webb 
City  zone. 

This  productive  area  extends  from  Oronogo  on  the  northwest  to 
Porto  Rico  and  Duenweg  on  the  southeast,  a  distance  of  ten  miles.  For 

421 


422 


THE  COST  OF  MINING 
SHIPMENTS  OF  ORE  FROM  THE  JOPLIN  DISTRICT 


Year 

Zinc  ore 

|l 
Lead  ore         Year 

Zinc  ore 

Lead  ore 

1895 

144,487 

31,294 

1902 

262,545 

31,625 

1896 

155,333 

27,721 

1903 

234,873 

28,656 

1897 

177,976 

30,105 

1904 

267,240 

34,362 

1898 

234,455 

26,687 

1905 

252,435 

31,679 

1899 

255,088 

23,888 

1906 

278,930 

39,189 

1900 

248,446 

29,132 

1907 

286,589 

41,742 

1901 

258,306 

35,177 

1908 

.  259,609 

38,532 

PRODUCTION  OF  ZINC  IN  NEW  SOUTH  WALES 
(IN  TONS  OF  2240  LB.) 


1903 

1904 

1905 

1906 

1907 

1908 

Spelter  
Zinc  in  ore  exported  

286 
14,625 

299 
22,318 

544 
30,637 

1,008 
33,427 

984 
76,645 

1,065 
113,853 

this  distance  the  average  width  of  the  zone  is  perhaps  three-quarters 
of  a  mile,  though  it  widens  at  one  or  two  places  to  a  mile  and  a  half  and 
narrows  at  other  places  to  a  quarter  of  a  mile.  In  a  rough  way,  I  esti- 
mate the  productive  ground  at  4800  acres.  It  would  not  be  inaccurate 
to  describe  this  entire  tract  as  a  continuous  orebody,  although  it  shows 
great  irregularities.  The  total  production  of  this  zone  has  been  approxi- 
mately 3,000,000  tons  of  zinc  and  lead  ore,  derived  from  mining  and 
milling  75,000,000  tons  of  rock.  The  value  actually  realized  has  been 
about  $90,000,000,  but  at  present  prices  the  amount  would  be  much 
greater.  The  production  of  the  zone  for  1907  was  109,229  tons  zinc 
ore  worth  $5,000,000  and  24,336  tons  lead  ore  worth  $1,700,000,  approxi- 
mately, making  a  total  value  on  the  ground  of  $6,700,000.  The  spelter 
realized  from  this  production  may  be  estimated  at  55,000  tons,  worth  in 
St.  Louis  $6,390,000.  The  pig  lead  realized  may  be  estimated  at  19,000 
tons,  worth  in  St.  Louis  $1,985,000.  The  average  price  of  spelter  was 
5.812  cents  at  St.  Louis,  and  of  lead  5.225  cents.  On  these  prices  the 
average  yield  to  the  miner  was  $45.23  for  zinc  ore  and  $68.73  for  lead 
ore. 

Geology  of  the  Joplin  District  at  Large. — The  rocks  in  which  the  ore 
occurs  constitute  a  flat-lying  formation  of  chert  and  limestone  about 
250  ft.  thick.  At  the  bottom  of  the  formation  is  a  persistent  bed 
of  flint  about  20  ft.  thick,  called  the  Grand  Falls  chert.  Above  this  is 
limestone  containing  many  layers  and  nodules  of  flint.  Originally  this 
cherty  limestone  formation  was  all  covered  by  a  stratum  of  black  shale; 
which  occasionally  contains  a  little  coal.  The  greater  part  of  this  shale 
has  been  removed  by  erosion,  but  certain  portions  of  it  still  remain  in 


ZINC  MINING  423 

the  form  of  long  strips  filling  trough-like  depressions  in  the  underlying 
limestone. 

The  orebodies  of  the  region  are  all  contiguous  to  these  areas  of  de- 
pressed shale,  occurring  either  under  or  along  the  sides  of  the  shale 
troughs.  These  troughs  of  shale  are  called,  by  the  way,  "soapstone 
bars."  The  explanation  which  I  believe  to  be  the  true  one  of  the  occur- 
rence, both  of  the  shale  troughs  and  of  the  ore,  is  as  follows: 

The  limestone,  along  certain  lines  (of  an  origin  not  at  present  expli- 
cable), was  dissolved  out  while  the  shale  formation  still  overlaid  the 
entire  region.  The  caverns  formed  by  this  dissolution  finally  became 
so  large  that  they  caved  in,  allowing  the  over-lying  shale  to  settle  down 
into  the  pits  thus  formed  to  a  depth  of  from  a  few  feet  to  as  much  as 
150  ft.  below  the  surface  of  the  cherty  limestone  formation.  The  dis- 
solution of  the  limestone  did  not  affect  the  chert  beds.  These  were 
broken  up  during  the  subsidence  caused  by  the  disappearance  of  the  lime. 
The  result  was  that  underneath  and  along  the  sides  of  the  shale  filling 
of  the  troughs  there  were  great  quantities  of  broken  flint  mixed  with 
mud  derived  from  the  soft  overlying  shale.  There  were  also  masses  of 
limestone,  of  all  sizes,  remaining  on  the  sides  and  even  in  the  bottom  of 
the  troughs.  The  limestone  remnants  increase  quantity  as  you  go 
from  the  center  of  the  trough  until  finally  you  reach  the  solid  unaffected 
masses. 

Ore  has  been  deposited  in  the  brecciated,  or  disturbed  mass  of 
flint  and  limestone  boulders  and  clay  occupying  the  space  between  the 
depressed  shale  in  the  center  of  the  trough  and  the  unaltered  formation 
at  its  bottom  and  sides.  The  ore  was  brought  in  by  surface  waters. 
Naturally  the  deposition  of  ore  was  not  uniform.  It  is  supposed  that 
the  organic  matter  in  the  shale  was  the  precipitating  agent  which  caused 
the  deposition  of  zinc  and  lead  sulphates  picked  up  by  the  surface  waters 
during  the  process  of  the  erosion  of  the  Ozark  plateau  to  the  southeast. 
At  any  rate  the  ore  is  found  in  exceedingly  irregular  bodies  in  the  broken 
ground  along  the  troughs  of  shale,  or  "soapstone  bars." 

Naturally,  channels  of  dissolution  such  as  those  described  as  causing 
the  troughs  would  be  of  varying  extent  and  depth.  This  is  the  case. 
In  some  of  the  larger  channels  the  limestone  has  been  removed  quite  to 
the  bottom  of  the  cherty  limestone  formation  and  the  broken  ground 
extends  down  to  the  basal  member — the  Grand  Falls  chert.  This  chert 
is  a  brittle  stratum  of  flint  containing  innumerable  crevices  so  that  it 
serves  as  a  ready  channel  for  the  circulation  of  water.  On  this  account 
much  ore  has  been  deposited  in  it.  It  is  called  the  "  sheet  ground." 
This  sheet-ground  ore,  while  of  exactly  the  same  composition  and  origin 
as  the  other  ore,  is  distinguished  from  it  notably  in  several  respects. 
Instead  of  being  in  a  mass  of  broken  ground  along  the  "soapstone  bars" 
it  occurs  under  the  solid  original  limestone  masses.  Instead  of  being  in 


424  THE  COST  OF  MINING 

a  shapeless  irregular  mass,  it  forms  a  regular  flat  bed,  like  a  seam  of  coal. 
Laterally,  its  extent  is  variable,  as  also  is  its  richness,  but  the  minerali- 
zation is  pretty  uniform  over  extensive  areas,  often  as  much  as  2000  ft. 
wide.  It  must  never  be  forgotten,  however,  that  the  sheet  ground  is 
always  attached  to  the  loci  of  mineralization — the  soap  stone  bars." 
It  forms  extensive  shoots  under  the  limestone  bordering  the  deepest  and 
most  strongly  mineralized  bars  or  channels.  If  often  extends  1000  ft. 
from  a  bar,  very  rarely  over  2000  ft. 

Practically  all  of  the  successful  sheet-ground  mining  to  date  has 
been  confined  to  the  great  Webb  City  ore-channel,  between  Oronogo 
and  Porto  Rico.  It  is  generally  believed  that  the  sheet  ground  yields 
about  3  per  cent,  of  the  rock  mined  in  zinc  or  lead  ore.  The  zinc  ore 
obtained  averages  not  far  from  60  per  cent,  zinc;  the  lead  ore  about  80 
per  cent.  lead.  The  ore  is  obtained  by  crushing  and  washing  in  con- 
centrating mills,  which  save  about  60  per  cent,  of  the  zinc  and  90  per 
cent,  of  the  lead  actually  contained  in  the  rock.  The  total  saving  ap- 
proximates 66%  per  cent. 

Exploration. — Practically  the  only  method  now  employed  in  searching 
for  ore  is  churn  filling.  The  irregular  deposits  along  the  soapstone 
bars  are  apt  to  be  quite  narrow.  The  vertical  extent  is  often  greater 
than  the  width.  Consequently,  in  looking  for  such  orebodies  it  is  neces- 
sary to  drill  holes  pretty  close  together.  An  experienced  driller  can  form 
a  good  idea  from  the  kind  of  ground  he  encounters  of  what  the  chances 
are  of  finding  ore.  If  he  finds  a  little  ore  and  open  ground,  that  is, 
broken  rudely  stratified  material,  he  will  place  his  following  holes  not 
over  50  ft.  from  the  first  until  he  discovers  pay  ore.  Then  he  will  en- 
deavor to  follow  the  ore  by  drilling  along  the  course  of  the  bar.  Where 
the  bars  are  small  and  irregular,  it  is  often  necessary  to  drill  as  many 
as  three  or  four  holes  to  the  acre  to  explore  a  tract  thoroughly.  Since 
the  drilling  costs  an  average  of  80  to  90  cents  per  foot,  and  the  holes  will 
average  about  175  ft.  deep,  we  may  place  the  cost  of  exploring  such  a 
tract  roughly  at  $500  per  acre. 

In  the  sheet  ground  no  such  amount  of  drilling  is  necessary.  On 
account  of  the  much  greater  uniformity  of  the  deposits  it  is  often  possible 
to  explore  the  ground  satisfactorily  with  only  one  hole  to  every  two  acres. 
Holes  to  explore  this  ground  are  drilled  more  than  200  ft.  and  the  cost 
per  hole  will  approximate  $200.  The  actual  cost  per  acre  for  exploring 
this  ground  is  probably  less  than  $100,  but  I  think  it  should  properly  be 
about  $200. 

It  is  the  almost  universal  custom  to  appraise  the  value  of  the  ore 
only  by  the  eye.  The  cuttings  from  the  drill  come  out  in  the  form 
of  coarse  angular  sand  which  the  driller  washes  in  a  bucket  of  water, 
and  simply  forms  a  judgment  as  to  whether  the  sand  contains  pay 
ores  or  not.  If  the  cuttings  show  only  small  amounts  of  ore,  not  enough 


ZINC  MINING  425 

in  his  judgment  to  pay  for  mining,  he  records  "a  few  shines  of  jack  or 
lead."  If  he  thinks  the  ground  doubtful  he  writes — " shines"  or  "good 
lead,"  or  both. 

Mining  Methods. — The  mining  of  this  ore  will  be  readily  understood 
from  the  above  description  of  its  occurrence.  Owing  to  the  shallowness 
of  the  deposits  there  is  no  occasion  whatever  for  large  expensive  shafts. 
As  the  extreme  depth  is  only  250  ft.,  and  the  average  depth  in  mining 
perhaps  less  than  175  ft.,  it  is  evident  that  a  single-compartment  shaft, 
except  in  the  unusual  contingency  of  encountering  a  very  large  amount 
of  water,  can  be  sunk  very  cheaply.  It  is  probable  that  the  average 
shaft  of  the  Joplin  district  does  not  cost  more  than  $4000.  Hence  it  is 
cheaper  to  open  up  the  ground  by  numerous  shafts  rather  than  by  exten- 
sive openings  underground.  It  will  also  be  evident  that  aside  from 
the  question  of  first  cost  the  tramming  of  ore  is  cheaper  on  the  surface 
than  underground. 

The  effect  of  these  considerations  is  that  the  accepted  method  of 
operating  in  the  district  is  to  have  one  mill  supplied  with  ore  from  several 
shafts,  the  ore  being  transported  to  the  mill  by  inclined  tramways. 

The  hoisting  methods  of  the  district  are  unique  and,  considering 
the  conditions,  exceedingly  satisfactory.  The  ore  is  shoveled  into 
buckets  locally  called  "cans"  which  hold  about  800  Ib.  each.  These 
cans  are  placed  upon  small  trucks  underground  and  run  to  the  shafts, 
where  they  are  attached  to  the  hoisting  rope  by  a  man  called  the  "  tub- 
hooker."  The  hoist  is  placed  in  a  derrick  or  headframe  vertically  above 
the  shaft,  the  rope  passing  over  the  sheave  a  few  feet  above  the  engine. 
The  hoist  man  pulls  the  bucket  up  so  that  the  bottom  of  it  is  slightly 
above  his  head.  He  then  attaches  to  the  bottom  of  the  bucket  a  hook 
which,  when  the  bucket  is  again  lowered,  dumps  it  into  a  bin.  To  do 
this,  hoist  his  empty  bucket  back  to  position,  detach  the  hook,  and  lower 
again,  is  in  the  hands  of  an  expert  hoistman,  a  matter  of  only  a  couple  of 
seconds.  In  this  manner  it  is  possible  to  average  400  cans  per  shift, 
or  160  tons.  Only  two  men  are  employed,  whose  combined  wages  are 
approximately  $5  per  day.  The  hoist  itself  costs  $250.  The  derrick 
in  which  the  hoisting  is  done,  together  with  the  bin  ore,  costs  $600  more. 
It  is  evident  that  this  method  of  operating,  while  having  the  appearance 
of  crudity,  is  exceedingly  effective  and  cheap.  The  actual  cost  is  prob- 
ably not  over  5  cents  per  ton  hoisted. 

The  mining  underground  involves  the  usual  requirements  of  selecting 
the  ground  so  as  to  mine  out  the  best  of  the  ore  without  leaving  too  much 
in  the  pillars  and  without  making  the  openings  too  dangerous.  In  the 
"upper  ground"  irregular  deposits  this  selection  opens  the  field  for  the 
exercise  of  skill.  In  the  sheet-ground  deposits  the  work  is  far  more 
regular  and  certain.  As  a  general  statement,  the  advantages  of  the  upper 
deposits  in  the  way  of  richer  ores  and  softer  ground  are  nearly,  if  not 


426  THE  COST  OF  MINING 

quite,  counterbalanced  in  favor  of  the  sheet  ground  by  the  greater  uni- 
formity and  persistence  of  the  latter.  There  is  really  very  little  dif- 
ference in  the  methods  employed  in  the  two  kinds  of  mines.  Tn  the 
upper  ground  the  ore  is  takeji  from  large  irregular  chambers  and  in  the 
sheet  ground  from  flat  deposits  from  8  to  20  ft.  thick  that  are  as  regular 
over  considerable  areas  as  a  seam  of  coal.  The  only  differences  in  mining 
between  the  two  kinds  of  mines  are  of  an  unimportant  nature  which  will 
be  readily  understood  from  the  above  description,  and  need  not 
be  explained. 

Milling  Methods. — The  visitor  from  outside  districts  is  apt  to  be 
very  much  surprised  at  the  crudity  of  the  milling  methods  employed,  and 
many  an  engineer  has  discovered  what  he  believed  to  be  a  field  for  vast 
improvement  by  introducing  better  methods.  Thus  far  nothing  what- 
ever has  come  of  such  attempts.  They  have  usually  been  based  upon 
some  radical  misapprehension  of  the  conditions. 

The  Joplin  mills  confessedly  only  extract  about  60  per  cent,  of  the 
zinc  ore.  The  proportion  varies  greatly  at  different  mines.  The  varia- 
tion, however,  is  not  generally  due  to  the  mill  practice,  but  to  the  char- 
acter of  the  ore.  The  mills  are  suited  to  save  only  the  free  ore  which 
can  be  easily  separated  from  the  gangue  by  rather  coarse  crushing.  The 
remaining  zinc  which  is  enclosed  in  small  particles  in  a  secondary  growth 
of  flint  cannot  be  saved  except  by  much  finer  grinding  and  much  more 
expensive  methods  for  which  the  resulting  ore  extracted  will  not  pay. 

The  ordinary  mill  consists  of  no  more  than  three  large  Cooley  jigs 
supplemented  by  one  or  two  Wilfley  tables.  The  Cooley  jigs  are  of 
the  Harz  type,  but  contain  usually  from  five  to  seven  cells.  The  ore 
after  being  reduced  to  about  one-half  inch  is  next  passed  to  the  rougher 
jig,  which  catches  some  of  the  coarse  lead  and  makes  a  rough  concentra- 
tion of  the  zinc  ore.  This  is  drawn  as  a  middling  product  from  the 
rougher  and,  after  being  passed  over  a  second  pair  of  rolls,  goes  to  a 
second  jig  called  the  "  cleaner. "  The  tailings  from  the  cleaner  jig  are 
sometimes  passed  over  a  third  or  smaller  jig  for  further  treatment  and 
a  certain  proportion  of  finer  material  is  settled  out  for  treatment  in  one 
or  two  Wilfley  tables.  The  ordinary  mill  costs  from  $10,000  to  $20,000 
and  has  a  capacity  of  about  15  tons  an  hour.  The  largest  mills  in  the 
district  have  cost  about  $50,000  and  have  a  capacity  of  35  tons  an  hour. 

Losses  in  Mining. — It  must  be  remembered  that  the  mining  of  zinc 
ore  was  first  begun  as  an  incident  to  lead  mining,  which  was  done  at  or 
near  the  surface.  At  first  the  zinc  ore  was  sold  usually  at  very  low  prices. 
It  was  cleaned  on  hand  jigs,  but  later  cheap  and  crude  mills  were  built. 

As  the  lead  was  found  in  small  irregular  patches,  at  or  near  the  surface, 
there  was  no  inducement  to  mine  it  on  a  large  scale.  One  or  two  miners 
would  work  at  it  and  pay  royalties  to  the  farmers  who  owned  the  land. 
Since  two  men  could  not  work  much  land,  there  was  no  demand  for 


ZINC  MINING  427 

leases  of  more  than  a  very  few  acres.  As  lead  mining  gradually  changed 
into  zinc  mining  the  small  leases  continued  and  the  small  mills  were  only 
expected  to  handle  the  richest  pockets  of  "jack."  In  this  way  the 
business  has  built  itself  up  in  ever-increasing  volume  as  a  multitude  of 
small  leases.  The  system  has  all  the  faults  that  might  be  expected  of 
it,  but  it  was  the  one  which  the  circumstances  demanded.  That  it  is 
attended  by  frightful  losses  will  appear  from  the  following  summary 
of  operating  results. 

Take  100  tons  of  ore  containing  5  per  cent,  metallic  zinc  in  the  ground, 
we  have  the  following  approximate  statement: 

COSTS  AND  LOSSES  ON  ZINC  ORE 

Costs  Losses  Total 

Spelter  value  100  tons  5  per  cent,  ore  at  5  cents, 

St.  Louis $500 . 00 

Loss  in  mining,  10  per  cent $50 . 00 

Mining,  90  tons  at  $1.05 $94.50 

Loss  in  milling,  40  per  cent 180 . 00 

Milling  70  tons  at  $0. 25 22 . 50 

Loss  in  smelting,  12  per  cent 35 . 10 

Smelting  and  amortization 54 . 00 

Transportation 9.15 


Total $180.65       $265.10       $345.75 

Approximate  profit $54 . 25 

This  shows  a  recovery  by  mining  of  $450;  by  milling  of  $270;  by 
smelting  of  $234.90.  The  approximate  costs  are  36.1  per  cent,  of  the 
total  value;  the  losses,  53  per  cent.;  the  profit,  10.9  per  cent.  The  profit 
on  recovered  value  is  23  per  cent.,  and  this  profit  is  divided  as  follows: 
Smelter,  $14.25,  or  26  per  cent.;  royalty,  15  per  cent.,  $23.60,  or  43  per 
cent.;  mines,  $17.15,  or  31  per  cent,  of  the  total  profit. 

Joplin  Cost  Statements. — The  cost  statements  of  the  Joplin  districts 
are  open  to  a  good  deal  of  uncertainty,  on  account  of  the  lack  of  accurate 
information  concerning  the  tonnage  handled.  The  accompanying  state- 
ment of  the  Grace  Zinc  Company  illustrates  the  point.  The  "  cans  hoisted  " 
refers  in  the  local  vocabulary  to  buckets,  the  greater  portion  of  which  are 
assumed  to  hold  1000  Ib.  As  a  matter  of  fact,  it  is  known  that  they  do 
not;  some  operators  estimate  that  they  hold  900  and  others  800  Ib. 
On  either  of  these  two  assumptions  the  tonnage  would  be  much  greater 
than  that  taken  as  the  basis  for  the  cost  statement  which  is  only  625  Ib. 
per  bucket.  This  tonnage  estimate  is  based  on  the  tonnage  content  of 
cars  holding  from  1^  to  2J£  tons  in  which  the  ore  is  hoisted  to  the  mill. 
A  considerable  amount  is  rejected  as  waste.  If  we  were  to  assume  that 
the  cans  contained  800  Ib.  each,  our  tonnage  would  be  156,000  and  the 
costs,  instead  of  totaling  $1.41,  would  be  reduced  to  $1.10.  If  the  cans 
were  estimated  at  900  Ib.  each,  the  tonnage  estimate  would  be  almost 


428 


THE  COST  OF  MINING 


180,000,  and  the  cost  would  fall  to  95  cents.  The  low  grade  of  ore,  and 
particularly  the  method  of  leasing  and  mining  which  has  been  adopted, 
prevent  the  installation  of  devices  by  which  a  more  accurate  measure 
could  be  taken  of  the  tonnage. 

GRACE  ZINC  COMPANY 
PRODUCTION  AND  COST  STATEMENT  APRIL  1.   1905,  TO  JAN.  1,  1908 

Cans  hoisted •. 390,346 

Tons  dirt  milled 121,291 

Tons  mixed  ore  recovered. .    5,307 


$47,939.43 

25,722.82 

17,616.19 

12,050.81 

11,160.39 

452.18 

28,304.19 

18,870.34 

9,248.40 


Breaking  ore  
Tramming  
Hoisting  
Pumping  

Per  ton 
dirt 

$0.40 
0.21 
0.15 
0  10 

Per  ton 
concentrates 

$9.03 
4.85 
3.32 
2  27 

Exploring  
Timbering.  .  .  . 

0.09 

2.10 
0  09 

Milling  .... 

0  23 

5  33 

General  expense  

0.15 

3.56 

Construction 

0  08 

1  74 

Total  

$1  41 

$32  29 

Royalty  paid  

Net  value  of  ore 

Total  expense  

Net  profit.  . 

$171,364.75 

$38,957.55 

$221,230.21 
171,364.75 

$49,865.46 

A  more  accurate  statement  of  costs  is  based  on  the  tonnage  of  con- 
centrates produced.  The  amount  of  these  is,  of  course,  accurately 
determined.  It  is  probable  that  the  figures  given  in  the  accompanying 
statement  give  a  fair  idea  of  average  costs  for  mining  and  milling  in  the 
Joplin  district. 

I  have  not  made  an  estimate  of  the  amortization  charge,  which  should 
be  made  against  such  a  plant  as  that  from  which  the  cost  statement  is 
taken.  The  actual  cost  of  such  a  plant  outside  of  the  amounts  covered 
by  construction  and  exploring  is  probably  not  over  $20,000.  All  re- 
newals are  covered  in  operating  expense.  Construction  probably 
more  than  takes  care  of  the  plant  itself.  It  is  probable  that  a  sum  of 
$3000  a  year  in  addition  to  the  costs  given  would  be  an  ample  return 
on  the  actual  plant  investment.  This  would  amount  in  the  table  to 
less  than  $8000,  and  would  increase  the  total  costs  per  ton  of  dirt  to 
$1.49,  and  per  ton  of  concentrates  to  $34. 

Assuming  the  last  figure  to  represent  the  complete  mining  and  milling 
cost,  and  that  a  concentrate  containing  60  per  cent,  zinc  is  smelted  at  a 
cost  of  $14  a  ton,  with  a  loss  of  12  per  cent.,  we  find  that  1056  Ib.  of 
spelter  costs J$48,  or  4.54  cents  per  pound.  While  it  is  undoubtedly 


ZINC  MINING  429 

true  that  some  mines  at  all  times,  and  most  mines  for  short  periods, 
can  produce  spelter  cheaper,  I  believe  that  the  above  figure  is  a  fair 
aver  age  •. 

MIAMI  DISTRICT,  1919 

The  above  description  of  the  Joplin  field  and  its  mining  processes 
will  still  serve  the  purpose  although  superficially  great  changes  have 
taken  place.  Nearly  every  mine  in  the  tracts  described  is  now  worked 
out;  but  the  production  of  the  field  is  maintained.  In  1916  the  mines 
of  the  Webb  City-Joplin  tracts  were  still  operating  at  high  pressure 
under  the  influence  of  the  great  war  boom  in  zinc  of  1915.  According 
to  Siebenthal  13,196,000  tons  were  mined,  yielding  only  155,960  tons  of 
spelter,  1.1  per  cent.!  With  the  wane  of  prices  and  the  rise  of  costs  such 
mines  of  course  became  hopelessly  unprofitable. 

But  25  miles  to  the  southwest  a  new  district,  called  the  Miami,  in 
Oklahoma  sprang  up  like  a  mushroom.  Mr.  R.  C.  Allen  has  kindly 
given  me  the  following  facts  about  it:  Geologically  there  is  little  differ- 
ence from  the  tracts  described  above  except  that  the  ore,  instead  of  lying 
under  detached  troughs  of  shale,  is  under  the  main  outcrop  of  it,  occur- 
ring as  much  as  five  miles  back  under  the  cover  of  this  shale,  which  here 
is  not  only  carbonaceous  but  oil  bearing.  It  appears  that  the  whole 
Joplin  field  has  been  mineralized  by  a  migration  of  mineralized  waters 
toward  the  northwestward  during  the  slow  weathering  and  erosion  of 
the  low  dome  of  the  Ozarks;  the  mass  of  which  lies  toward  the  southeast. 
The  rocks  composing  this  dome  (see  chapter  on  S.  E.  Missouri)  are  of 
lower  Paleozoic  age.  The  cherty  Mississippian  limestone  perhaps  was 
a  general  channel  for  waters  which  entered  the  ground  at  a  higher  level. 
Such  waters  flowing  under  some  head  forced  their  way  along  the  pervious 
chert  beds  at  the  bottom  of  the  limestone  for  some  distance  under  the 
overlying  impervious  shale.  But  that  formation  was  an  effective  barrier 
and  the  percolating  waters  were  impounded  under  it.  Perhaps  a  return 
flow  was  set  up  in  places  along  the  lower  surface  of  the  shale  beds,  or, 
perhaps  in  places  fault  fissures  allowed  the  waters  to  escape  through 
them.  More  probably,  perhaps,  such  faults  would  crack  up  the  brittle 
cherts  of  the  Mississippian  thus  making  an  easy  channel  of  circulation 
along  which  the  mineralized  waters  might  travel  far;  but  the  fissures 
would  be  entirely  closed  in  the  plastic  clay  shale.  At  any  rate  it  is  sup- 
posed that  the  carbonaceous  material  of  the  shales  helped  cause  the 
solutions  of  zinc  and  lead  sulphates  to  be  precipitated  as  sulphides. 

Although  the  mines  of  the  Miami  district,  owing  to  its  being  entirely 
beneath  the  shale,  are  considerably  deeper  than  those  about  Joplin, 
their  extreme  depth  is  only  380  feet.  Exploration  was  conducted  by 
churn  drilling  on  an  open  prairie.  The  mines  were  opened  like  magic. 
At  the  beginning  of  1916  not  a  mill  was  in  the  district;  by  the  middle  of 


430  THE  COST  OF  MINING 

1919  there  were  205  with  a  nominal  capacity  for  treating  110,000  tons 
a  day;  but,  owing  to  the  slack  demand  for  ore,  only  a  small  proportion 
of  these  were  running.  The  total  cost  of  all  this  development  and  equip- 
ment, all  built  of  course  under  war  conditions,  was  estimated  at  about 
$24,000,000.  Up  to  January  1,  1919  these  plants  had  operated  as  follows : 

Tons  rock  treated 9,630,000 

Concentrates  produced 651,000 

Recoverable  zinc 275,000 

Recoverable  lead 68,000 

Average  yield,  metallic  zinc 2 . 85  per  cent. 

Average  yield,  metallic  lead 0.7    per  cent. 

Thus  the  ores  in  this  district  are  more  than  three  times  as  rich  as  those 
about  Joplin.  The  recovery  in  concentrates  is  about  6.8  per  cent.,  i.e., 
if  those  concentrates  bring  $40.00  a  ton  the  crude  ore  milled  yields  $2.72. 
The  average  cost  of  operating  is  about  $2.00,  say  $1.50  for  mining  and 
$0.50  for  milling;  equal  to  $30  per  ton  of  concentrate. 
•  But  on  the  whole  the  business  is  patently  unprofitable.  It  is  impossi- 
ble that  the  205  mills  can  average  more  than  2000  tons  of  concentrates 
each  per  year.  It  is  not  probable  that  the  average  operating  life  even 
at  that  rate  can  be  as  high  as  10  years;  more  likely  it  is  about  5  years. 
At  either  of  these  rates  the  cost  of  capital  is  prohibitive.  Even  on  a 
ten-year  life  it  will  be  $9.00  a  ton.  Since  nearly  all  these  mines  are 
leases  they  pay  royalties  averaging  certainly  not  less  than  15  per  cent.; 
therefore  the  yield  to  the  operator  is  only  85  per  cent.  We  have  then : 

Operating  costs $30 

Plant  cost  . .  9 


Total $39 

To  come  out  even  this  must  be  only  85  per  cent,  of  the  selling  price, 
which  then  must  be  $46.  This  is  a  minimum  which  would  yield  no 
profit  to  the  average  operator  under  assumptions  of  life  that  are  certainly 
not  warranted.  I  doubt  if  this  business  would  be  as  good  as  neutral  at 
a  price  of  $52.00  per  ton  of  concentrates.  At  that  price  at  least  as  many 
would  lose  money  as  would  gain  it.  The  district  has  been  ridiculously 
over-equipped.  I  suppose  two-thirds  of  the  mills  can  only  operate 
spasmodically. 

Of  course  there  are  always  some  operators  who  are  clever  enough,  or 
whose  properties  are  good  enough,  to  make  money.  Such  men,  I  am 
told,  count  on  an  extraction  of  about  20,000  tons  of  concentrates  per 
forty  acre  lot.  The  cost  of  development  and  equipment  is  about  $150,000 
equal  to  $7.50  per  ton.  If  the  crude  ore  is  better  than  the  average  they 
may  produce  concentrates  for  an  operating  cost  of  say  $20.  With  such 
a  mine,  allowing  the  royalty  to  be  15  per  cent,  and  the  price  of  ore  $40, 
the  cost  and  royalties  would  be  about  $34  and  the  profit,  say  $120,000, 


ZINC  MINING  431 

or  $3000  per  acre.  The  return  on  the  capital  w,ould  be,  perhaps,  16  per 
cent.  But  this  is  a  meager  prospect  for  a  short  lived  investment  plus 
the  administrative  effort  and  skill  required  to  carry  one  of  these  enter- 
prises through.  I  think  we  must  suppose  that  the  business  offers  no 
very  striking  rewards  unless  the  concentrates  will  average  $50.00  at  least. 
If  this  is  true  it  follows  that  a  fair  price  for  the  metals  from  this 
district,  on  the  ground  is  nearly  5  cents  a  pound  (average  yield  1050) 
and  to  this  must  be  added,  under  present  conditions  nearly  3  cents  for 
transportation  and  smelting,  bringing  the  total  price  required  for  the 
combined  zinc  and  lead  recoverable,  to  about  8  cents  per  pound. 

ZINC  MINING  IN  WISCONSIN,  1908 

Wisconsin  has  been  within  the  last  few  years  second  in  the  production 
of  zinc  in  the  United  States.  Its  future  is  thought  by  many  to  be  ex- 
ceedingly promising,  but  I  must  confess  to  some  doubts  as  to  the  ability 
of  the  district  to  maintain  a  large  output  for  many  years  in  succession. 
The*  district  is  in  the  extreme  southwestern  corner  of  the  State. 

The  zinc  ores  are  associated  with  iron  in  the  form  of  marcasites,  usu- 
ally in  almost  equal  quantities.  It  is  impossible  by  ordinary  methqds  of 
water  concentration  to  separate  this  iron  from  the  zinc.  The  separation 
must  be  accomplished  electrically  either  by  magnetic  attraction  or  by 
static  repulsion.  The  magnetic  separators  are  cheap  installations  costing 
about  $10,000  each  for  a  capacity  of  some  twenty  tons  of  concentrates 
daily.  The  process  consists  of  a  very  light  roast  which  partially  oxidizes 
and  magnetizes  the  marcasite  so  that  by  passing  the  ore  thus  roasted  by 
a  group  of  magnets,  the  iron  is  taken  out.  This  is  the  usual  method 
employed  in  the  district. 

With  the  exception  of  the  association  of  zinc  with  the  iron  there  is  no 
radical  difference  between  the  problem  of  mining  in  Wisconsin  and  in 
Missouri  except  that  the  orebodies  have  certain  different  characteristics 
which  I  shall  presently  explain.  The  mining  and  milling  can  be  done  in 
approximately  the  same  way,  although  the  costs  in  Wisconsin  seem  to 
average  some  20  per  cent,  higher  than  in  Missouri. 

The  Wisconsin  orebodies  fill  partial  openings  in  the  limestone  made 
by  the  subsidence  of  large  prism-like  masses  in  the  bottom  portion  of  the 
limestone.  The  limestone  stratum  in  which  the  ore  occurs  is  about  150 
ft.  thick,  and  is  underlaid  by  a  persistent  bed  of  clay  shale.  It  looks  as 
if  the  limestone  might  have  been  dissolved  out  for  a  foot  or  two  above 
the  shale  along  certain  channels  to  such  an  extent  that  finally  a  large 
irregular  prism  of  limestone  detached  itself  from  the  solid  mass  and  fell 
down  a  distance  of  perhaps  two  feet.  The  result  of  this  subsidence  being 
that  the  interior  of  the  prism  is  cracked  up  to  a  certain  extent  and  certain 
openings  are  made  along  the  top  and  sides.  These  openings  have  served 
for  the  deposition  of  the  ores. 


432  THE  COST  OF  MINING 

The  openings  thus  formed  in  the  cross-section  have  the  shape  of 
a  rude  arch,  usually  quite  flat  at  the  top,  and  breaking  down  in  irregular 
steps  along  the  sides.  In  the  local  phraseology,  the  ores  deposited  in 
the  level  at  the  top  of  the  arch  are  called  "flats,"  and  those  occurring 
along  the  sides  are  called  "pitches."  The  slightly  disturbed  broken  up 
interior  of  the  prism  is  called  the  "core." 

These  orebodies  have  precisely  the  irregularities  that  one  would 
expect  from  such  an  explanation  of  their  origin.  In  some  places  the 
dissolution  of  the  lime,  or  whatever  it  was  that  caused  the  subsidence, 
was  more  extensive  than  at  other  places;  so  that  the  prisms  are  both 
wider  and  higher  in  some  places  than  in  others.  The  high  places  take 
the  shape  of  long  elliptical  cones.  That  is  to  say,  that  the  roof  slopes 
down  both  longitudinally  and  in  cross-sections.  In  some  cases  these 
prismatic  orebodies  have  been  proved  to  have  considerable  presistence  in 
length.  The  Empire  and  Enterprise  mines  have  been  worked  on  one  run 
of  ore  for  a  total  length  of  about  half  a  mile,  the  greatest  width  being 
about  120  ft. 

It  remains  to  say  that  the  mineralization  of  the  prisms  is  irregular. 
Ore  sometimes  is  found  on  both  sides  of  the  arch,  but  is  generally  of  pay 
quality  on  one  side  only. 

These  orebodies  seem  to  have  an  ordinary  course  of  about  N.  70°  E., 
but  sometimes  they  make  an  abrupt  turn,  and  in  one  well-authenticated 
case  the  ore  turned  at  right  angles  to  its  ordinary  course,  and  ran  for 
350  ft.  in  a  course  of  N.  20°  W. 

It  is  believed  locally  in  Wisconsin  that  the  runs  of  zinc  ore  will  be 
found  to  be  exceedingly  presistent,  not  always  following  the  same  direc- 
tion, but  making  occasional  turns  and  then  resuming  their  other  course 
again.  It  seems  to  me  likely  that  they  will  have  a  considerable  degree 
of  persistence,  but  that  they  will  be  persistently  payable  is  a  different 
matter.  Very  likely  the  large  prisms  that  have  been  well  mineralized 
and  are  payable  will  be  found  to  be  connected  only  by  comparatively 
small  and  tortuous  channels  that  will  not  pay  for  working  them. 

The  Cost  of  Zinc  Mining  in  Wisconsin. — The  actual  operating  ex- 
penses in  Wisconsin  seem  to  be  about  the  same  or  a  little  higher  than  in 
the  Joplin  field.  The  only  reason  for  the  increased  cost  is  the  smaller 
volume  of  ore  that  can  be  secured  from  any  one  shaft.  It  is  usual  to 
pay  a  royalty  of  10  per  cent,  to  the  owner's  of  the  land. 

BUTTE  AND  SUPERIOR 

This  company  has  done  the  chief  part  of  the  mining  on  a  great  shoot 
of  silicious  zinc-silver  ore  which  is  spread  for  perhaps  three  quarters  of  a 
mile  along  one  of  the  major  fissure  veins  of  Butte,  Montana  The  western 
end  of  these  ore-bodies  has  been  the  subject  of  apex  litigation  by  virtue 


ZINC  MINING 


433 


of  which,  partly,  the  neighboring  Elm  Orlu  Mining  Co.  is  also  an  im- 
portant mine. 

It  seems  that  this  vein,  called  the  Rainbow  Lode,  is  an  example  of 
the  zonal  deposition  of  ores.  At  the  surface  it  contained  only  silver- 
manganese  ores.  The  large  bodies  of  zinc  sulphide  came  no  nearer  than 
700  ft.  to  the  present  surface.  They  were  not  impoverished  at  the  sur- 
face by  leaching — they  are  all  primary.  What  succeeds  the  zinc  at 
greater  depths  is  not  known.  Copper  bearing  veins,  apparently  of  later 
age  flank  this  lode  on  the  south  and,  I  believe,  intersect  it.  It  has  been 
surmised  that  copper  ores  might  occur  in  the  Rainbow  lode  below  the 
zinc,  but  no  evidence  of  it  is  reported  at  the  depth  of  2050  ft. 

The  general  results  of  zinc  mining,  the  grade  of  crude  ores  and  con- 
centrates, scale  of  operations  are  shown  in  the  following  tables. 


Crude 

Zinc  concentrates 

Tons 
crude 
ore 

Per 

cent, 
zinc 

Tons 

Per 
cent. 

Oz. 

sil- 

Smelter 
returns 

Freight  to 
smelter 

Net  return 
to  mine 

Profit 

milled 

zinc 

ver 

1913  

296,940 

19.9 

104,174 

49.00 

24.2 

$3,526,660 

$850,007 

$2,676,652 

$942,988 

1914  

327,210 

18.6 

101,411 

53.16 

25.4 

4,037,674 

799,259 

3,238,414 

1,417,127 

1915  

522,300 

17.0 

152,89753.62 

22.14 

13,244,133 

1,157,016 

12,087,116 

9,125,947 

1916  

627,370 

15.5 

171.747j52.88 

21  .  54 

14,625,321 

1,483,770 

13,141,551 

8,873,445 

1917  

461,953 

15.5 

138,661 

47.4 

17.83 

7,817,674 

1,101,237 

6,716,437 

2,347,495 

1918  j     468,814 

15.9 

135,533 

51.2 

20.03 

6,922,803 

1,007,558 

5,915,244 

714,798 

Totals..  . 

2,704,587 

804,433 

$6,397,847 

$23,421,800 

Net  Current  and  Working  assets  at  end  of  period  increase.  . 
Dividends  paid 

Total  dividends  and  increase  of  surplus  about 

Capita!  and  other  charges  from  profits  about 


$3,321,000 

16,571,510 

19,900,000 

3,500,000 


These  capital  charges  are  clearly  accounted  for  in  the  reports  and 
consist  of  purchases  of  mining  claims,  additions  to  equipment  and  in- 
vestments in  stocks,  bonds,  etc.  They  are  all  of  such  a  character  as  to 
be  required  in  the  course  of  the  business  and  cannot  be  liquidated,'  there- 
fore they  must  be  added  to  the  cost  of  production  at  the  rate  of  ap- 
proximate by  $1.25  per  ton  milled. 

MINING  AND  MILLING  COSTS 
Per  Ton  Crude 


Mining 

Milling 

General 

Depreciation 

Total 

1913 

$3.09 

$2.69 

$0.07 

$1.25 

$  7.10 

1914 

3.25 

2.17 

.22 

1.25 

6.89 

1915 

3.69 

2.08 

1.25 

7.02 

1916 

4.79 

2.14 

1  .  25 

8.18 

1917 

5.49 

2.74 

1.23 

1.25 

10.71 

1918 

7.59 

2.95 

.68 

1.25 

12.48 

434 


THE  COST  OF  MINING 


COMMERCIAL  RESULTS  PER  TON  OF  CONCENTRATE 


Price  of  spelter, 
cents  per  pound 

Price  silver  per 
oz.,  cents 

Total 
value 

Smelter 
returns 

Deductions 

1913 

5.6 

60 

$69.28 

$33.90 

$35.38 

1914 

5.08 

55 

67.75 

40.00 

27.75 

1915 

13.05 

51 

151.25 

86.56 

64.69 

1916 

12.63 

66 

147.70 

85.17 

62.53 

1917 

8.73 

82 

97.35 

56.35 

41.00 

1918 

7.76 

100 

99.45 

51.78 

47.67 

Freight 

Cost  of 
mining 

Total  costs 
and  losses 

Total  profit 

Profit  per 
pound  zinc  re- 
covered, cents 

.      1913 

$8.15 

$21.04 

$64.57 

$4.71 

06 

1914 

7.89 

22.22 

58  .  86 

8.90 

0.9 

1915 

7.56 

23.95 

96.20 

55.05 

5.8 

1916 

8.64 

30.00 

101.17 

46.53 

4  5 

1917 

7.94 

35.64 

84.58 

12.77 

1.8 

1918 

7.43 

43.12 

98.22 

1.23 

0.13 

From  this  it  appears  that  the  cost  of  producing  spelter  for  all  costs, 
capital  and  operating,  from  this  high  grade  ore  were  no  less  than  5  cents 
a  pound  for  recovered  zinc  in  1913  and  rose  to  7.6  cents  in  1918.  The 
margin  of  profit  except  during  the  war  boom  has  been  consistently  narrow. 
The  real  profits  in  1918,  after  making  sufficient  allowance  for  deprecia- 
tion, were  almost  nothing. 

When  we  look  at  the  high  metallic  contents  of  these  ores,  at  the  prices 
of  1918,  it  is  rather  surprising  that  there  is  so  little  profit.  The  crude  ore 
contained,  "per  ton : 

6.33  ounces  of  silver  at  $1.00 $6. 33 

3  pounds  copper  .at  24.7  cents , 0. 74 

26  pounds  lead  at  7.1  cents 1 . 85 

318  pounds  zinc  at  7.76  cents 24 . 67 


Total  apparent  value . 


$33 . 59 


There  is  no  suspicion  of  poor  management;  the  facts  are  much  to  the 
contrary.  It  is  rather  an  example  of  the  progressive  dissipation  of 
value  in  a  complex  ore  in  the  various  processes  through  which  it  must  be 
taken.  The  cost  of  mining  and  milling  consumes  37  per  cent.  The 
first  losses  are  in  milling  by  which  8  per  cent,  of  the  silver,  14  per  cent,  of 
the  copper,  4  per  cent,  of  the  lead  and  6  per  cent,  of  the  zinc,  aggregating, 
about  $2.10  per  ton,  are  put  into  the  tailings.  In  the  next  step  7. 6  per 
cent,  of  the  total  value  is  consumed  in  freight.  The  zinc  smelting  saves 
the  zinc  only,  the  other  metals  are  left  as  residues  which  must  be  smelted 


ZINC  MINING  435 

over  again.  Here  we  have  a  terrific  rejection  at  once;  13  per  cent,  of  the 
zinc  and  nearly  all  of  the  other  metals,  say  altogether  about  30  per  cent, 
of  the  value.  The  smelting  margins  (see  zinc  smelting)  are  about  $28 
per  ton  of  concentrate  equal  to  25  per  cent,  of  the  total.  Thus  to  sum  up: 

Mining,  milling  and  depreciation  account  for 37. 1  per  cent. 

Losses  in  milling 6.3  per  cent. 

Freight  to  smelter 7.6  per  cent: 

Smelter  margins .  25 . 0  per  cent. 

Loss  in  smelting 30.0  per  cent. 


Consumption  of  value  on  zinc  basis  only 106.0  per  cent. 

But  a  certain  margin  of  profit  is  recovered  by  the  sale  of  residues  con- 
taining silver,  copper  and  lead,  and  of  a  small  amount  of  lead  concentrate 
saved,  so  that  the  apparent  loss  of  106  per  cent,  is  reduced  to  about  98 
per  cent. 

These  were  the  conditions  of  1918.  It  is  not  to  be  expected  that  they 
are  representative.  Under  the  operating  conditions  the  price  of  spelters 
was  abnormally  low.  As  an  operating  proposition  the  mine  was  never 
quite  on  its  feet  until  1914.  To  apply  the  operating  results  of  that  year 
to  average  prices,  we  get  the  following: 

Value  as  before  of  zinc,  copper,  lead  and  silver  in  crude $22 . 00 

Cost  mining  and  milling $6 . 89 

Loss  in  milling 1.35 

Freight 2 . 30 

Smelter  margins .       4 . 64 

Loss  iii  zinc  smelting 2.15       1 7 . 33 


Profit  on  zinc  basis $4 . 67 

As  before  there  would  be  considerable  salvage  in  the  residues,  so  that 
we  may  suppose  the  total  profits  would  be  about  $5.50  equal  to  about 
25  per  cent,  of  the  gross  value  in  the  ore. 

It  is  interesting  to  note  that  the  cost  of  mining  on  this  lode  is  high, 
just  as  it  is  in  the  case  of  the  copper  mines  of  the  same  district;  that  the 
average  of  capital  expenditures  is  about  the  same  as  in  other  mines  of 
the  same  class  for  example  the  Bunker  Hill-Sullivan;  and  that  the  rich 
ores  of  the  west,  carrying  15  to  20  per  cent,  zinc  with  a  proportion  of 
other  valuable  metals,  are  not  after  all  invincible  competitors  for  the 
zinc  mines  of  the  Mississippi  Valley,  which  do  well  to  average  4  per  cent, 
in  zinc  and  lead  combined. 

CONSOLIDATED  INTERSTATE-CALLAHAN 

This  is  the  principal  zinc  mine  of  the  Coeur  d'Alene  district.  It 
occurs  in  a  fissure  vein  on  the  west  side  of  the  Canyon  Creek  batholith 


436  THE  COST  OF  MINING 

and  is  in  all  respects  similar  to  the  silver-lead  veins  of  that  district  ex- 
cept that  it  occurs  in  the  Pritchard  formation  which  is  more  slaty  than 
the  overlying  Burke  and  Revett  formations.  In  the  cost  of  mining  and 
milling  however  this  mine  was  never  able  to  reach  the  low  figures  of  some 
of  the  lead  mines,  because  the  vein  is  narrower.  About  $5.50  per  ton 
was  about  as  a  cost  as  was  ever  reached.  It  would  now  be  $9  to  $10 
at  least  per  ton  of  crude  and  that  would  mean  about  $25.00  per  ton  of 
concentrates.  'The  mine  has  been  able  to  ship  at  the  rate  of  some  70,000 
tons  of  concentrates  a  year  and  made  a  great  deal  of  money  during  the 
boom  years  1915  and  1916,  but  ordinarily  its  margin  of  profit  would  be 
slender  just  as  in  the  case  of  Butte  and  Superior.  Its  shipments  and 
earnings  were  about  two  fifths  those  of  the  latter  mine. 

CONCLUSIONS  ON  ZINC  MINING 

These  analyses  of  the  zinc  industry  in  the  most  productive  fields 
lead  to  the  conclusion  that  under  present  conditions,  or  those  of  1918, 
the  ores  are  hardly  as  profitable  with  spelter  at  9  cents  a  pound  and 
silver  at  $1.25  an  ounce,  as  they  were  before  the  war  with  spelter  at  5.5 
cents  a  pound  and  silver  at  60  cents  an  ounce. 


CHAPTER  XXV 
GOLD  STATISTICS,  WARS  AND  PRICES 

The  statistics  of  gold  production  are  easily  obtained  and  on  their 
face  show  remarkably  little  change  during  the  last  ten  years.  It  is  a 
common-place  that  the  war  period,  1914  to  1919,  more  especially  the 
later  part  of  it,  was  unfavorable  to  the  business  of  gold  mining.  Other 
commodities  and  labor  were  in  acute  demand  at  prices  far  above  those 
of  former  years,  but  gold  remained  nominally  at  the  same  price.  Actu- 
ally, of  course,  its  price  went  down  in  proportion  to  the  decline  of  its 
purchasing  power.  This  finally  resulted  in  a  rather  abrupt  decline  in 
production. 

But  the  decline  caused  by  war  conditions  does  not  fully  explain  the 
position  of  gold.  It  is  reasonable  to  suppose  that  the  output  would 
have  declined  anyway  in  recent  years,  or  at  least  would  not  have  in- 
creased. South  Africa  accounts  for  half  the  world's  yearly  supply. 
The  increase  of  production  from  1900  onward  has  been  largely  the  growth 
of  the  South  African  industry.  In  fact  for  the  last  fifteen  years  the 
African  production  has  been  the  one  source  of  supply  that  has  raised  the 
world  output;  without  it  there  would  have  been  a  considerable  falling 
off.  Thus,  in  1904  the  world  production  was  $347,377,000,  of  which 
Africa  yielded  $85,913,000,  leaving  for  the  rest  of  the  world  $261,464,000. 
In  1915,  the  year  of  greatest  output  on  record,  $468,725,000,  Africa 
yielded  $217,852,000,  leaving  only  $250,612,000  for  the  rest  of  the  world. 
In  1917,  Africa  produced  $214,614,000;  the  rest  of  the  world  only  $208,- 
976,000.  It  is  true  that  disturbances  in  some  countries,  notably  Mexico 
and  Russia,  had  something  to  do  with  this  falling  o^,  but  this  was  not 
a  controlling  factor.  The  main  thing  is  that  no  new  supply  of  gold  ore 
has  been  discovered;  no  new  process  for  obtaining  more  gold  from  known 
sources. 

Maximum  Transvaal  Gold  Production  in  1912. — The  output  has 
varied  with  the  exploitation  of  districts  already  under  operation.  The 
Boer  War,  1899-1902,  retarded  the  growth  of  mining  in  the  Transvaal, 
but  as  soon  as  recovery  had  been  made  from  that,  and  the  district  had 
reached  full  and  unhampered  activity,  the  output  of  that  country  rapidly 
approached  its  maximum,  and  practically  reached  it  in  1912.  Since 
that  year,  with  the  exception  of  a  spurt  in  1915,  there  has  been  no  indi- 
cation of  an  increase  of  gold  production.  There  does  not  seem  to  be 
any  reason  to  anticipate  a  rapid  decline  in  the  near  future;  but  to  expect 

437 


438  THE  COST  OF  MINING 

the  gold  industry  to  hold  its  own  for  the  next  ten  years  is  about  as  opti- 
mistic as  one  can  reasonably  be  if  reliance  be  placed  on  all  factors  turning 
out  favorably. 

Despite  these  facts,  the  price  of  gold  has  declined.  Complaint  of 
the  high  cost  of  living  was  general,  even  before  the  war.  The  amount 
of  other  commodities  which  a  given  amount  of  gold  would  buy  has 
diminished  steadily  ever  since  1894.  The  strange  thing  is  that  this 
diminution  of  purchasing  value  was  accelerated  during  the  war  in  the 
face  of  an  apparently  increased  demand.  These  facts  suggest  various 
explanations: 

1.  It  is  not  improbable  that  .the  money  value  of  gold  is  governed, 
not  by  the  current  output,  but  by  the  total  amount  available  in  the  world. 
Other  metals,  once  put  in  use,  are  not  available  to  any  large  extent  for 
other  purposes.  Thus,  iron  put  into  railroads,  buildings,  machinery, 
tools,  and  like  purposes,  generally  stays  in  those  allocations  until  it  is 
destroyed  by  rust  or  wear.  Its  manufacture  is  specialized  for  certain 
purposes.  In  general,  it  is  cheaper  to  make  new  iron  for  a  particular 
use  from  the  ore  than  to  remelt  old  iron,  because  such  iron  is  not  generally 
fit  for  the  new  purpose.  Lead  and  zinc  are  used  largely  for  paints, 
from  which  recovery  of  metal  is  impracticable.  Copper  is  not  so  com- 
pletely fixed,  perhaps,  nor  quite  so  destructible,  but  by  far  the  greater 
part  of  it  is  put  at  once  into  permanent  structures  from  which  it  is  seldom 
removed.  Silver,  even  is  exposed  to  considerable  destruction  by  use  in 
household  ware,  ornaments,  corrosion  and  the  wear  of  common  small 
coins.  But  gold  is  not  put  to  any  large  extent  to  any  fixed  allocation. 
It  is  merely  locked  up  in  treasure  vaults  to  be  used  as  standard  for  ex- 
changing commodities.  Some  of  it,  of  course,  is  used  for  ornaments 
and  for  coins,  but  even  these  are  jealously  guarded. 

The  Available  Supply  of  Gold. — Almost  all  gold  is  capable  of  being 
remelted  and  put  to  another  use.  About  the  only  means  by  which  it  is 
destroyed  are  the  absorption  of  small  amounts  in  chemicals,  the  wear 
of  jewels  and  coins,  and  absolute  loss.  Thus  the  large  output  of  the 
last  twenty  years  has  swelled  the  stock  of  available  gold  immensely  more 
than  similarly  increased  outputs  of  other  commodities  have  increased 
the  available  stocks  of  those  commodities.  For  instance,  the  available 
stock  of  manufactured  or  usable  iron  or  copper  or  wheat  ready  for  con- 
sumption is  seldom  more  than  a  year's  supply.  If  new  supplies  should 
be  cut  off,  some  part  of  these  metals  could  be  taken  from  the  less  impera- 
tive uses  and  put  to  more  necessary  ones;  but  there  would  be  an  immedi- 
ate curtailment  of  industry,  production,  and  comfort.  The  people 
would  be  headed  straight  for  want  and  disaster.  Of  the  iron  and  copper 
produced  a  hundred  years  ago,  only  an  infinitesimal  fraction  is  available 
for  commercial  purposes  today;  but,  in  the  case  of  gold,  a  large  percentage 
of  that  produced  a  hundred  years  ago  is  undoubtedly  still  subject  to 


GOLD  STATISTICS,  WARS  AND  PRICES  439 

exchange.     In  view  of  these  considerations  it  becomes  interesting  to 
reflect  upon  the  following  statistics : 

The  Record  of  Gold  Production. — The  production  of  gold  was  stag- 
nant and  comparatively  small  until  about  1850,  when  the  great  historic 
discoveries  in  Australia  and  California  suddenly  tapped  the  gold  resources 
of  two  virgin  continents.  These  supplies  seemed  abundant  for  all 
necessary  purposes.  In  1853,  the  output  reached  $155,500,000.  This 
remained  the  record  output  for  forty  years,  until  1893.  Production  stag- 
nated or  declined,  going  as  low  as  $90,000,000  in  1874,  and  to  $95,400,000 
in  1883.  In  forty  years,  1851  to  1890  inclusive,  the  total  production 
was  about  $4,500,000,000.  About  1890  a  revival  of  gold  mining  took 
place,  the  production  climbed  to  a  new  maximum  of  over  $460,000,000 
in  1912,  and  the  total  production  of  twenty-eight  years,  1891  to  1918 
inclusive,  was  $9,500,000,000. 

There  seems  to  be  reason  to  believe  that  the  world's  stock  of  gold  is 
at  least  three  times  as  great  in  1919  as  it  was  in  1890.  Various  influences 
are  in  favor  of  the  conservation  of  the  metal.  It  is  reasonable  to  believe 
that  between  1850  and  1890  the  proportion  of  the  annual  production 
lost  through  wear  and  wastage  was  much  greater  than  it  has  been  since 
then.  Gold  coins  were  in  much  more  common  use.  The  population 
among  which  the  metal  was  exposed  to  absorption  was  proportionately 
greater.  In  1890  the  new  gold  per  capita  was  only  about  10  cents  per 
year;  in  1915  about  30  cents.  Now,  suppose  that  at  all  times  each  person 
wears  out  5  cents'  worth  of  gold  a  year.  In  1890  such  wastage  would 
have  been  50  per  cent,  of  the  total  supply;  in  1915  it  would  have  been 
only  16%  per  cent. 

From  these  observations  it  may  be  perceived  that  though  the  annual 
production  of  gold  is  not  increasing,  but  actually  diminishing,  the  amount 
may  still  be  sufficient  to  swell  the  available  stock  of  gold  even  beyond  the 
proportionate  demand  for  it.  It  is  not  unlikely  that  between  1860  and 
1890  the  stock  of  gold  did  not  increase  in  proportion  as  fast  as  the  general 
business  of  the  world,  and  its  purchasing  power  steadily  increased,  but 
that  since  1890  the  stock  has  increased  faster  than  the  world's  business, 
and  its  purchasing  power  has  proportionately  diminished.  It  is  probable 
that  about  1890  the  supply  of  gold  ran  so  low  that  the  demand  for  it 
would  account  for  the  low  prices  for  commodities  of  the  early  '90's,  To 
illustrate  this,  consider  some  hypothetical  figures. 

Suppose  that  the  available  stock  of  gold  in  1850,  the  accumulation 
of  all  former  times,  was  $1,000,000,000,  and  that  between  1850  and  1890, 
half  of  the  gold  produced  was  added  to  the  stocks.  The  accumulation 
would  be  about  $2,250,000,000  in  the  period,  and  the  total  supply  in- 
1890  would  be  $3,250,000,000.  Assume,  further,  that  of  the  total  gold 
produced  since  1890,  an  amount  equal  to  80  per  cent,  has  been  added  to 
the  stock.  The  accumulation  would  be  $7,600,000,000  for  the  period 
and  the  present  total  amount  would  be  $10,850,000,000. 


440  THE  COST  OF  MINING 

Relation  of  Gold  Supply  to  Industrial  Development. — If  these  figures 
are  even  approximately  correct  it  becomes  probable  that  the  stock  of 
gold  in  proportion  to  the  production  of  the  chief  staples  of  commerce  is 
much  greater  today  than  it  was  in  1890;  that  is,  there  is  more  gold  in 
existence  today  to  be  exchanged  for  available  iron,  coal,  copper,  wheat 
or  cotton  than  there  was  in  1890.  In  this  connection  it  may  be  remem- 
bered that  in  the  latter  part  of  the  nineteenth  century  the  expansion 
of  the  world's  commerce  was  proceeding  at  a  rate  that  perhaps  has  not 
been  equaled  since  then.  It  included  the  opening  up  of  the  interior  of 
America,  Australia,  and  Africa,  the  construction  of  nearly  all  existing 
railroads,  the  development  of  mechanical  manufacturing,  the  factory 
system  of  employment,  and  the  creation  of  most  of  the  great  industrial 
corporations.  Since  that  time  business  and  wealth  have  continued  to 
expand,  but  more  through  the  development  of  specialties  and  refinements, 
less,  perhaps,  through  the  discovery  of  new  resources  and  processes,  and 
very  likely  not  at  the  same  rate  as  in  the  earlier  period. 

2.  Emphasis  should  probably  be  laid  upon  the  tendency  to  conserve 
gold  more  and  more  for  the  purposes  of  exchange.  Gold  for  many  years 
has  been  handled  almost  exclusively  by  banks  and  the  treasuries  of  the 
leading  nations.  Its  use  as  common  coin  has  proportionately  dimin- 
ished. Of  late  years,  as  a  war  measure,  all  the  leading  belligerents  have 
suspended  specie  payments,  so  that  the  ordinary  citizen  has  scarcely 
been  able  to  obtain  gold  for  any  purpose.  It  seems  possible  that  this 
should  be  regarded  as  an  additional  and  special  factor  superimposed 
upon  the  tendencies  outlined.  It  makes  gold  as  a  medium  of  exchange 
seem  distant,  even  imaginary;  it  enables  governments  to  make  gold  go 
further  than  ever  as  a  basis  of  money,  and  makes  the  average  man  use 
" money"  with  less  and  less  thought  of  obtaining  the  metal. 

Gold  More  Plentiful  Than  Goods. — At  any  rate,  whatever  the  rela- 
tion of  gold  to  prices,  it  is  evident  that,  as  a  result  of  the  recent  war, 
gold;  for  the  uses  to  which  it  is  put,  is  relatively  more  abundant  than 
are  the  principal  staples  of  commerce.  Apparently  this  is  the  result  of 
every  war  to  a  sufficient  degree  to  cause  extensive  borrowing  by  govern- 
ments, the  diversion  of  large  numbers  of  men  from  productive  occupa- 
tions, the  derangement  and  prostration  of  industry  through  interruption 
of  supplies,  and  the  laying  waste  of  productive  areas.  If  conditions  were 
normal,  considering  the  feverish  demand  for  exchange,  a  strong  demand 
for  gold  at  the  present  time  might  be  expected;  but  the  feverish  conditions 
are  in  themselves  a  proof  of  want,  and  the  want  of  food,  tools,  and  equip- 
ment is  more  insistent  than  the  demand  for  gold. 

A  book  should  be  written  upon  the  effect  of  great  wars  upon  prices 
and  general  economic  conditions.  I  have  inquired  for  such  a  publica- 
tion, but  have  not  heard  of  one.  In  the  absence  of  an  authoritative 
discussion,  I  am  tempted  to  put  down  a  few  observations  that  I  have 
been  able  to  glean  from  various  sources. 


GOLD  STATISTICS,  WARS  AND  PRICES  441 

Industrial  Status  of  Napoleonic  Era. — At  the  time  of  the  Napoleonic 
wars  the  modern  industrial  world  was  in  its  infancy.  Only  one  country- 
Great  Britain — had  made  any  progress  to  speak  of  in  the  use  either  of 
mechanical  power  or  intensive  manufacture.  The  population  of  the 
leading  countries  of  Europe  was  from  one-quarter  to  three-quarters  of 
what  it  is  today.  Production  was  generally  by  handicraft  and  not  by 
the  factory.  Transportation  of  staples  was  only  beginning.  Commerce, 
therefore,  beween  distant  points  had  been  confined  largely  to  rare  and 
valuable  fabrics  and  luxuries.  Dependence  upon  the  resources  of  other 
continents  was  not  at  all  general  but  was  confined  amost  entirely  to 
the  countries  at  the  western  fringe  of  Europe.  During  that  war  an 
almost  complete  monopoly  of  ocean  traffic  fell  to  Great  Britain  and  to 
the  comparatively  feeble  and  loosely  organized  United  States.  Through 
this  combination  of  circumstances  Great  Britain,  although  at  that  time 
producing  little  or  no  gold  from  her  own  territories,  undoubtedly  became 
the  principal  gold  owner  of  the  world  and  adopted  the  gold  standard. 
It  was  a  period  of  general  enlightenment,  of  increased  knowledge  of 
distant  countries,  of  progress  in  natural  science,  of  bold  intellectual 
speculation. 

The  Financial  Panic  of  1819. — The  economic  effects  were  chiefly 
the  diversion  of  handicraftsmen  into  military  pursuits,  including  the 
manufacture  of  military  supplies,  and  a  derangement  of  ocean  commerce 
which,  after  all,  deprived  only  a  comparatively  small  number  of  people 
of  their  accustomed  supplies.  Furthermore,  there  was  an  increase  of  the 
public  debt,  which  in  the  case  of  England,  at  least,  dwarfed  anything 
ever  known  before.  These  causes  were  sufficient  to  produce  a  general 
and  prolonged  rise  in  the  price  of  many  commodities  of  general  commerce. 
The  effects  varied  greatly  from  place  to  place,  depending  upon  whether 
or  not  they  were  exposed  to  direct  ravages.  The  wars  themselves  were 
confined  to  a  period  of  twenty-five  years,  but  the  prices  of  some  com- 
modities continued  high  for  forty  years,  or  for  fifteen  years  or  more  after 
the  war.  The  economic  readjustments  at  the  close  found  expression 
in  an  acute  financial  panic  in  1819,  four  years  after  Waterloo. 

Effects  of  Nineteenth  Century  Wars. — In  the  middle  of  the  nineteenth 
century,  between  1855  and  1870,  a  number  of  comparatively  localized 
wars  disturbed  the  industrial  world.  Of  these,  by  far  the  most  im- 
portant was  the  Civil  War  in  America.  The  Crimean  War  of  1855  and 
1856,  the  Italian  War  of  1859,  the  Austro-Prussian  War  of  1866,  the 
Franco-Prussian  War  of  1870-71  were  either  short  lived  or  affected 
regions  of  slight  industrial  importance.  But  the  combined  effects  were 
a  considerable  increase  of  public  debt,  very  large  in  France  and  the  United 
States.  During  the  Civil  War  there  was  an  important  stoppage  of  one 
of  the  world's  chief  staples — cotton. 

Again,  there  was  a  prolonged  rise  in  the  price  of  commodities,  which 


442  THE  COST  OF  MINING 

culminated  in  1864,  but  which  persisted  at  least  until  1880.  It  may  be 
remarked,  in  passing,  that  the  severe  financial  panic  of  1873  had  little 
effect  on  checking  the  high  prices. 

Just  preceding  this  series  of  political  disturbances  occurred  the  un- 
precedented discoveres  of  gold  in  California  and.  Australia,  which  not 
only  increased  the  supply  of  that  metal  at  an  extraordinary  rate,  but 
stimulated  exploration,  colonization  enterprise,  and  trade  in  all  parts 
of  the  world.  At  no  other  period  in  the  world's  history,  except,  perhaps, 
at  the  time  of  the  Spanish  conquests  of  Mexico  and  Peru,  was  the  supply 
of  gold  increased  so  rapidly  or  so  generally  distributed.  The  concur- 
rence of  this  fact  with  a  period  of  political  disturbances  and  a  succession 
of  wars  brings  about  a  confusion  of  economic  causes  which  it  is  probably 
very  difficult  to  unravel;  but  there  is  certainly  every  reason  to  suppose 
that  the  increase  of  gold  supply  had  a  good  deal  to  do  with  stimulating 
demand  and  raising  prices. 

After  the  Franco-Prussian  War  there  supervened  a  period  of  general 
tranquility  among  the  chief  civilized  and  industrial  nations  that  lasted, 
with  slight  interruptions,  for  about  forty  years.  In  the  earlier  part  of 
this  period  there  was  a  general  payment  or  reduction  of  public  debts 
and  also  the  stagnation  and  decline  of  the  output  of  gold,  together  with 
a  great  expansion  of  agricultural  development.  Prices  steadily  declined 
until  about  1895.  At  this  date  the  payment  of  public  debts  had  ceased 
and  the  reverse  tendency  began.  Just  what  caused  this  condition  I 
have  not  inquired  into  critically,  but  it  is  not  improbable  that  it  was 
attributable  to  the  renewal  of  international  rivalries,  the  increase  of 
of  armaments,  and  the  initiation  of  national  enterprises.  At  the  same 
time  the  production  of  gold  had  for  several  years  increased  rapidly. 

The  events  of  the  mid-century  find  some  parallel  in  more  recent  ones. 
Again  a  greatly  increased  gold  production  concurred  with  a  period  of 
general  prosperity.  Wealth  and  luxuries  were  produced  in  unex- 
ampled profusion  and  in  new  forms.  The  gas  engine,  the  automo- 
bile, and,  finally,  the  airplane  were  developed  and  added  much  to  the 
convenience,  activity,  and  information  of  millions.  Industry  was  or- 
ganized in  immense  units,  producing  the  staples  of  commerce  with  much 
greater  facility  and  in  many  times  greater  volume  than  had  ever  before 
been  known.  These  activities  centered  in  certain  areas  which  became 
the  industrial  clearing  houses  of  the  world.  Those  areas  became  popu- 
lated to  such  an  extent  that  the  people  in  them  were  and  are  absolutely 
dependent  for  their  prosperity  and  even  for  their  subsistence  upon  the 
constant  interchange  of  staples  on  an  immense  scale. 

Development  of  National  Rivalries. — Great  Britain  was  the  first  of  the 
principal  nations  to  feel  conscious  of  such  dependence  upon  trade,  but 
with  the  rapid  increase  of  population,  manufacture,  and  commerce  in 
Germany,  that  nation  became  thoroughly  conscious  of  it  also.  On  the 


GOLD  STATISTICS,  WARS  AND  PRICES 


443 


other  side  of  the  world,  too,  Japan  found  herself  confronted  with  the 
same  problem.  Thus  the  principal  industrial  areas  of  the  world  were, 
by  the  measure  of  their  indigenous  resources,  overpopulated.  In  Europe 
these  areas  were  occupied  by  different  nations,  each  imbued  with  jealousy 
of  its  neighbors  and  intensely  unwilling  to  permit  the  continuance  of  its 
trade,  and  therefore  of  its  life,  to  be  in  any  measure  at  the  mercy  of 
its  rivals.  Thus  overpopulation  was  certainly  the  underlying  cause  of 
formidable  international  rivalries,  giving  rise  to  innumerable  schemes 
of  expansion  aggression,  and  defence;  and  determining  the  tone  of 
thought  by  which  such  schemes  were  supported. 

The  series  of  wars  prompted  by  these  motives  has  already  been  long. 
It  includes  numerous  minor  conflicts  incident  to  colonial  aggressions 


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(According  to  M.  W.  von  Bernewitz.) 

of  the  Europeans,  though  the  collisions  between  great  nations  were 
avoided  until  the  Russo-Japanese  War  of  1904-1905.  But  war  in  Europe 
was  constantly  brewing,  and  was  with  difficulty  avoided  on  many  occa- 
sions. Finally,  a  furious  war,  all  the  more  violent  because  so  long 
repressed,  involved  all  the  principal  nations  of  the  world. 

The  events  of  the  Great  War  have  accentuated  rather  than  mitigated, 
in  Europe  at  least,  the  force  of  the  economic  conditions  outlined.  Those 
who  take  pains  to  look  the  situation  in  the  face  must  be  impressed  with 
the  following  facts :  The  total  white  population  of  the  world  is  about 
600,000,000.  Of  these,  three  quarters  live  in  Europe.  The  total  area 
occupied  by  white  populations  is  about  20,000,000  square  miles,  a  good 
part  of  which  is  in  the  circum-polar  regions  of  America  and  Asia  and  an- 


444  THE  COST  OF  MINING 

other  portion  in  the  deserts  of  Australia.  Of  this  population,  half  at 
least,  both  in  number  and  in  area  occupied,  have  been  thrown  into  a 
state  of  political  revolution  and  social  and  economic  chaos,  and  are  today 
suffering  in  varying  degree  from  all  the  distress  incident  to  such  terrors, 
from  starvation,  exposure  and  danger.  Out  of  the  ruins  of  the  empires 
of  Russia,  Germany,  Austria,  and  Turkey  a  number  of  small  nations  have 
been  created,  or  resurrected,  without  fixed  organization,  all  jealous  of 
their  neighbors;  some  already  at  war  with  each  other,  and  each  nation  far 
less  self-sustaining  than  the  larger  units  from  which  it  was  broken. 
When  it  is  considered  that  revolutions,  once  started,  are  hard  to  stop  and 
frequently  go  on  from  one  stage  to  another  for  generations,  it  is  hard  to 
look  upon  the  general  situation  of  the  white  race  with  much  assurance  of 
a  complete  return  to  tranquility  and  prosperity. 

These  conditions  do  not  affect  the  Anglo-Saxon  world  within  its 
own  territories  as  they  affect  every  other  white  nation.  The  Anglo- 
Saxons  are,  as  I  have  pointed  out  elsewhere,  richer  in  resources,  stronger 
in  industry,  and  firmer  in  political  organization  than  any  other  nation; 
and  these  facts  have  been  demonstrated  as  much  by  the  recent  war  as 
by  anything  that  ever  happened.  But  the  solidity  of  the  English- 
speaking  countries  is  not  the  only  factor  in  their  relations  with  the 
world,  unless  they  can  shut  out  and  ignore  the  rest  of  that  world — and 
that  is  precisely  what  it  is  proposed  not  to  do. 

The  economic  consequences  of  such  a  cycle  of  events  have  been  just 
such  as  one  might  expect  from  an  attentive  consideration  of  historical 
parallels.  But  in  this  case  the  tendencies  that  have  been  visible  on 
former  occasions  have  operated  with  multiplied  intensity.  Prices 
of  staples  have  been  forced  to  heights  only  the  extreme  peaks  of  which 
have  been  passed.  It  is  hard  to  escape  the  conclusion  that  the  main 
factor  in  these  high  prices  is  the  tremendous  national  borrowings. 
The  world  has  financed  itself  with  promises.  There  has  been  a  steady 
decline  in  the  purchasing  power  of  these  promises. 

To  return  to  the  general  figures  mentioned,  there  are  600,000,000 
white  people  divided  among  various  nations.  These  nations  owe  about 
$200,000,000,000.  At  .a  conservative  average,  each  individual  owes 
about  $300  and  each  head  of  a  family  $1,500.  The  theory  is  that  these 
sums  must  be  paid,  principal  and  interest,  not  out  of  product  but  out  of 
profit — out  of  savings.  It  is  only,  of  course,  when  these  debts  are  owed 
by  one  nation  to  another  that  these  sums  mean  an  actual  transfer  of 
goods.  The  debts  of  a  nation  to  its  own  citizens  can  be  paid  only  through 
taxes  from  those  citizens,  so  that,  although  the  process  may  affect 
individuals  variously,  in  a  national  sense  it  is  merely  a  transfer  from  one 
pocket  to  another.  The  overwhelming  preponderance  of  public  debts 
must  be  of  this  nature.  But  is  it  not  true  that  the  necessity  of  giving 
these  pocket-to-pocket  transfers  the  semblance  of  real  money  is  the 
potent  cause  of  marking  up  prices?  How  can  it  be  avoided? 


GOLD  STATISTICS,  WARS  AND  PRICES  445 

The  actual  wealth  is  not  money  but  goods.  A  nation  can  produce 
only  a  given  amount.  To  repay  itself  vast  sums  of  money  through  taxes 
for  interest  and  principal  can  be  accomplished  only  through  adding  to 
the  value  of  the  goods  the  amount  of  the  taxes.  As  this  addition  to  value 
is  not  expressed  in  goods,  but  in  money,  it  follows  that  the  sum  total  of 
goods  must  be  expressed  in  a  larger  amount  of  money,  i.e.,  in  inflated  or 
imaginary  value,  a  decreased  purchasing  power  of  the  dollar,  or  higher 
prices — all  these  expressions  meaning  the  same  thing. 

Hennen  Jennings  has  pointed  out  that  the  only  effective  check  upon 
the  progressive  depreciation  of  the  unit  of  value  through  these  causes  is 
free  payment  in  gold.  An  ounce  of  gold  is  divided  into  something  over 
twenty  dollars.  It  costs  as  much  effort  and  as  much  goods  to  produce 
the  gold  ounce  or  the  gold  dollar  as  it  ever  did.  Therefore,  so  long  as 
the  dollar  actually  represents  a  given  amount  of  gold  it  will  always 
represent  a  given  amount  of  effort.  If  a  given  amount  of  effort  made 
highly  efficient  by  improved  organization  and  appliances  can  be  made 
to  produce  a  greater  amount  of  goods,  it  is  likely,  also,  to  produce  in  a 
general  way  a  proportionately  greater  amount  of  gold.  The  only  in- 
fluences that  would  permanently  alter  this  relationship  would  be  funda- 
mental causes,  such  as  the  discovery  or  exhaustion  of  great  sources 
of  gold  by  which  the  metal  might  become  relatively  easier  or  more  difficult 
to  obtain.  When  it  is  obtained  only  at  greater  effort  than  is  necessary  in 
the  acquisition  of  other  commodities,  or  through  consumption  in  process 
of  its  production  of  greater  quantities  of  other  commodities,  then,  if 
secured  at  all,  it  must  be  acquired  through  the  use  of  greater  quantities 
of  those  commodities,  and  it  will  be  manifestly  equal  in  value  to  a  greater 
quantity  of  them — will  buy  more  of  them.  Prices  will  then  be  low. 

The  contrary  process  is  equally  imaginable  and  to  specify  it  would 
only  be  repetition. 

Thus  gold,  if  freely  used,  is  probably  as  dependable  and  fair  a  medium 
of  exchange  as  could  be  devised.  It  may  be  remarked  further  that  its 
equilibrium  is  maintained  in  the  long  run  through  natural  causes  which, 
of  course,  do  not  operate  instantly,  but  which  do  tend  to  confine  the  os- 
cillations of  value  between  comparatively  narrow  limits.  If  gold  is 
produced  in  quantity  greater  than  the  demand  for  it,  people  will  not  pay 
so  much  for  it  in  commodities.  This  is  equivalent  to  a  rise  in  cost  which 
will  force  some  producers  out  of  business.  On  the  other  hand,  if  the  stock 
of  gold  runs  short,  prices  will  be  low,  and  the  inducement  to  mine  more  of 
it  will  return. 

It  is  pertinent  to  remark  that  the  influence  of  prices  upon  gold  pro- 
duction is  bound  to  be  felt  in  the  long  run,  regardless  of  the  cause  of  the 
change  of  prices.  It  makes  no  difference  in  the  ultimate  effect  on 
the  gold  industry  whether  high  prices  are  brought  about  by  the  existence 
of  an  abnormally  large  stock  of  gold,  or  by  the  shortage  of  commodities 


446  THE  COST  OF  MINING 

brought  about  by  decreased  production  of  them  for  any  reason — wars, 
disasters,  disorder,  or  famine;  the  tendency  will  always  be  to  curtail  the 
production.  Such  influences  will  bring  about  considerable  swings  in 
the  popularity  of  the  industry.  The  reasons  which  operate  to  make 
gold  mining  unprofitable  will  discourage  or  diminish  the  search  for  gold. 
Plants  will  go  out  of  business,  and  a  considerable  period  will  elapse  before 
the  counter-swing  will  have  much  effect. 

The  gist  of  these  considerations  is  that  in  the  cycles  of  high  and  low 
prices  it  is  possible  to  discern  the  operation  of  common  economic  laws  An 
outburst  of  national  borrowing  is  in  itself  either  a  diversion  of  labor  from 
its  usual  channels  of  production  or  an  evidence  of  distress  brought  about 
by  the  shortage  of  production  from  some  other  cause.  It  will  either 
produce  high  prices  or  be  produced  by  them.  On  the  other  hand,  the 
widespread  liquidation  of  borrowings  can  be  accomplished  only  during 
the  periods  of  tranquility  when  labor  is  employed  in  full  measure  for 
the  production  of  private  wants,  when  there  is  freedom  from  calamity. 
A  war,  therefore,  unless  it  is  local  and  insignificant,  is  sure  to  raise  prices. 
The  more  general  and  violent  the  war,  the  wider  its  effect  in  raising  prices. 
Moreover,  the  effect  of  war  is  not  confined  to  the  period  of  organized 
military  effort,  but  will  persist  as  long  as  the  exhaustion  of  resources, 
the  impeding  of  traffic,  and  political  and  social  disorders  prevent  the 
resumption  of  peaceful  industry  in  an  efficient  manner. 

The  inducement  to  produce  gold  will  naturally  follow  upon  these 
influences.  Its  production  will  be  curtailed  during  the  whole  of  the  period 
of  high  prices  and4  high  costs,  and  will  not  be  resumed  with  full  impetus 
until  it  has  been  encouraged  for  some  years  by  low  prices,  which  means 
a  glut  of  the  chief  staples. 

It  certainly  is  to  be  expected,  and  feared,  that  the  present  situation 
of  the  world  indicates  a  long-continued  periof  of  high  prices  for  reasons 
which  mav  easilv  be  summarized  in  the  order  of  their  importance : 

1.  Every  new-  or  revolutionary  government  is  necessarily  unstable. 
Every  nation  between  the  Rhine  and  Vladivostok  and  from  the  Arctic 
Ocean  to  the  Mediterranean  and  the  Himalayas  is  the  seat  of  potential, 
even  prospective,  revolution.  The  population  of  this  tract  is  as  follows : 

Russian  Empire 170,000,000 

German  Empire  (including  Poland) 65,000,000 

Austrian  Empire 53,000,000 

Balkan  States  and  Turkey 40,000,000 


Total 328,000,000 

Every  nation  in  this  group  is  confronted  with  a  long  list  of  burdensome 
tasks  which  must  be  accomplished  despite  the  probability,  according  to 
historical  precedent,  of  having  its  projects  deranged  by  internal  disorder. 
It  must  establish,  or  re-establish,  public  and  private  credit.  It  must 


GOLD  STATISTICS,   WARS  AND  PRICES  447 

establish  new,  or  re-establish  old,  lines  of  trade  and  traffic.  It  must 
restore  or  replenish  its  stock  of  staples  and  raw  materials,  and  it  must 
make  provision  for  the  payment  of  foreign  debts.  How  easy  it  is  for 
national  and  racial  jealousies,  actual  or  latent  disorders,  to  prevent  all 
this,  not  only  locally  but  throughout  the  whole  area! 

2.  The  white  populations  unaffected  by  revolution  are  as  follows: 

British  Empire 60,000,000 

United  States 100,000,000 

France 40,000,000 

Italy 35,000,000 

Spain,  Portugal,  Netherlands,  Scandinavia 45,000,000 

South  America — Brazil,  Argentina,  Chile 20,000,000 


Total 300,000,000 

These  countries  are  in  control  of  the  resources  of  the  greater  part  of 
the  world,  but  by  a  very  unequal  division.  Of  the  chief  resources,  the 
Anglo-Saxons  control  the  preponderance.  On  the  whole,  however,  there 
is  nothing  to  prevent  this  group  from  resuming,  or  even  increasing, 
its  former  prosperity.  By  returning  to  peaceful  industry,  the  major 
portion  may  soon  replenish  its  warehouses.  The  chief  difficulties  are 
the  curtailment  of  national  expenditure  and  the  liquidation  of  foreign 
debts.  To  whatever  extent  these  operations  are  dependent  upon  the 
prompt  payment  of  obligations  and  a  resumption  of  good  feeling  by  the 
great  disturbed  populations  of  central  and  eastern  Europe,  northern 
Asia  (and  it  may  be  added,  perhaps,  of  China  and  Japan),  their  success 
can  hardly  be  regarded  as  present  as  other  than  doubtful. 

Even  if  it  is  reasonable  to  believe  that  the  recent  cycle  of  political, 
social  and  economic  disturbance  has  passed  its  acute  stage,  it  still  remains 
certain  that  these  distractions  have  operated  upon  a  scale  and  with  an 
intensity  scarcely  ever  known  before;  and  the  time  required  for  recovery 
should  logically  be  at  least  as  long  as  at  any  former  period.  On  this 
reasoning  one  might  expect  that  the  present  cycle  of  high  prices  will  not 
have  fully  subsided  until  about  1940,  at  the  best. 


CHAPTER  XXVI 
OCCURRENCE  AND  PRODUCTION  OF  GOLD 

VALUE  OF  GOLD  AND  TRANSPORTATION — ECONOMIC  PHASES  OF  GOLD  MINING — 
PLACERS — AMALGAMATION — CYANIDE  AND  OTHER  RECENT  PROCESSES — 
ECONOMIC  DISTINCTIONS  OF  GOLD  ORES — QUARTZ- PYRITE  LODES — REASONS 

FOR  VARIATIONS   IN  COSTS TfiLLURIDE   ORES   AND  DISTRICTS TABLES   OF  GOLD 

PRODUCTION — PRODUCTION  OF  VARIOUS  DISTRICTS — COST  OF  PRODUCING  GOLD 
PER  OUNCE — PROFITS  OF  GOLD  MINING  COMPARED  WITH  THOSE  OF  OTHER  METAL 
MINES. 

Within  recent  years  gold  has  become  more  than  ever  before  the 
precious  metal  par  excellence.  Its  production  has  not  only  increased 
enormously  in  amount,  but  also  greatly  by  comparison  with  its  historic 
rival,  silver.  A  general  description  of  its  qualities  has  no  place  here, 
but  it  will  be  interesting  to  review  the  more  salient  features  of  its  occur- 
rence bearing  on  its  production  and  cost. 

A  ton  of  pure  gold  is  worth  $602,836.  This  high  value  renders  the 
metal,  once  secured,  utterly  independent  of  transportation  costs,  for 
it  is  evident  that  it  can  be  carried  from  the  remotest  corner  of  the  globe 
for  a  minute  fraction  of  its  worth. 

Another  equally  important  fact  is  that  gold  occurs  to  an  exceedingly 
large  extent  in  such  form  that  its  extraction  from  ores  is  one  of  the 
simplest  of  metallurgical  problems,  so  that  it  can  nearly  always  be  ob- 
tained by  plants  erected  on  the  spot.  The  cost  of  such  plants  per  ton 
treated  is  moderate.  The  avidity  with  which  gold  has  been  sought  has 
resulted  in  the  exhaustion  of  the  mines  in  the  older  civilized  countries 
so  that  at  present  the  output  comes  from  new  or  barbarous  countries 
where,  for  the  most  part,  the  climate  is  bad,  labor  costly,  and  transporta- 
tion crudely  developed.  In  the  case  of  gold  mines,  therefore,  the  ques- 
tion of  transportation  has  little  or  nothing  to  do  with  moving  products 
from  the  mines,  but  much  to  do  with  moving  plants  and  supplies  to  the 
mines. 

The  history  of  gold  mining  exhibits  three  economic  phases  with  refer- 
ence to  mechanical  developments :  These  may  be  divided  chronologically 
into,  (1)  The  placer  period.  (2)  The  amalgamation  period.  (3)  The 
cyanide  and  smelting  period. 

1.  From  the  earliest  times  down  to  the  present  gold  has  been  very 
largely  obtained  in  a  metallic  state  from  the  debris  of  erosion,  i.e.,  from 
stream  gravels.  Owing  to  its  great  weight  gold  resists  transportation 
by  water  and  lags  behind  while  the  lighter  minerals  are  carried  off  to  the 
sea.  In  this  way  each  stream  in  a  gold-producing  country  is  a  natural 

448 


OCCURRENCE  AND  PRODUCTION  OF  GOLD  449 

concentrating  mill  and  often  retains  the  metal,  or  a  portion  of  it,  that 
was  once  scattered  through  enormous  masses  of  rock.  How  great  this 
concentration  may  be  is  perhaps  not  fully  realized  even  by  mining  men. 
A  stream  bed  100  miles  long  and  a  quarter  of  a  mile  wide  and  a  few  feet 
deep  may  have  gathered  gold  derived  from  thousands  of  cubic  miles 
of  eroded  rock.  The  gravel  that  now  contains  the  gold  may  equal  only 
a  millionth  part  of  the  mass  that  once  contained  it.  Undoubtedly 
in  every  such  case  a  very  large  portion  of  the  original  gold  has  also  been 
removed,  but  if  even  one  per  cent,  has  remained,  the  gravel  may  be  ten 
thousand  times  as  rich  in  gold  as  the  rock  from  which  the  gravel  was 
derived.  It  is  evident,  therefore,  that  streams  may  contain  highly 
profitable  deposits  in  regions  where  the  gold  was  originally  scattered 
through  a  multitude  of  insignificant  veins,  all  worthless  in  themselves. 
The  presence  of  placer  gold  in  payable  amounts  does  not  indicate  that 
payable  gold  will  be  found  in  situ.  Many  cases  might  be  cited  of  im- 
portant placer  mines  in  regions  where  there  has  never  been  a  good  mine 
of  any  other  kind.  To  be  sure  quartz  mines  have  been  found  in  Alaska, 
California,  Australasia,  and  many  other  regions  along  with  placer  deposits. 
On  the  other  hand,  in  early  times  placer  gold  was  obtained  in  Spain, 
France,  the  British  Isles,  Italy,  in  fact  all  over  Europe  where  scarcely  a 
payable  quartz  mine  has  been  known.  It  is  almost  certain  that  the  older 
civilized  countries,  Northern  Africa,  Western  Asia,  China,  India,  and 
Japan,  also  produced  a  full  quota  of  this  metal  from  sources  now  long 
forgotten. 

It  is  highly  probable  that  by  far  the  greater  part  of  the  gold  possessed 
by  mankind,  even  now,  came  from  placer  deposits.  Nearly  all  gold 
was  obtained  in  this  way  until  well  into  the  nineteenth  century  by  the 
process  of  mere  washing,  unaided  by  amalgamation  or  any  metallurgical 
process. 

2.  The  properties  of  quicksilver  have  been  known  from  very  early 
times,  and  undoubtedly  since  about  the  time  of  Columbus  this  metal 
has  been  used  to  a  large  extent  to  collect  gold  out  of  its  gangue  in  both 
placer  and  quartz-mining  operations.  But  it  was  not  until  the  almost 
simultaneous  discovery  of  gold  in  California  and  Australia  at  the  middle 
of  the  nineteenth  century  that  amalgamation  came  to  be  the  essential 
process  in  the  recovery  of  gold.  Before  the  working  of  extensive  quartz 
mines  in  those  countries  amalgamation  was  used  as  a  useful  adjunct  in 
cleaning  up  the  concentrates  from  gravel  washing,  but  for  that  purpose 
it  was  not  vital.  But  from  1850  to  1890  this  process  was  the  only  one 
successfully  used  by  English-speaking  people,  who  have  since  1850 
produced  most  of  the  world's  gold,  to  extract  the  metal  from  rocks  in 
place. 

The  method  was  found  to  apply  only  to  ores  in  which  the  gold  lay 
in  rather  loose  metallic  particles  in  the  rock.  It  is  essential  for  amal- 

29 


450  THE  COST  OF  MINING 

gamation  that  the  gold  when  it  adheres  to  the  quicksilver  will  be  free 
from  adherence  to  other  minerals.  In  course  of  time  more  and  more 
gold  ores  were  found  where  this  was  not  the  case.  It  was  found  that 
most  gold  veins  produced  amalgamating  ores  in  the  oxidized  zones  near 
the  surface,  but  that  only  selected  ones  would  yield  their  values  in  this 
way  after  the  sulphide  zone  was  reached.  Where  an  extraction  of  70 
to  90  per  cent,  was  easy  in  the  oxidized  zone,  the  extraction  would  drop 
to  60  or  50  per  cent,  in  the  sulphides.  At  the  same  time  the  actual  assay 
value  of  the  ore  would  show  some  diminution.  These  two  causes  were 
sufficient  to  render  many  a  mine  unpayable.  Although  some  mines 
continue  to  be  perfectly  amenable  to  amalgamation  to  great  depths, 
there  were  found  so  very  many  where  this  was  not  so  that  gold  mining 
began  to  decline,  especially  during  the  eighties.  This  decline  was  due 
to  the  limitations  of  the  amalgamation  process. 

3.  The  ingenuity  of  metallurgists  discovered  about  1890  remedies 
in  leaching  processes  that  would  extract  gold  independently  or  could 
be  used  as  supplements  to  amalgamation.  These  were  based  on  the 
solubility  of  gold  by  chlorine  gas  and  by  various  cyanides.  In  one  form 
or  another  these  chlorination  and  cyanide  processes  were  found  to  apply 
to  most  gold  ores.  This  happened  at  a  time  when  the  world  was  hungry 
for  gold.  Great  districts  were  found  like  the  Witwatersrand  where  by 
amalgamation  the. ores  would  pay  only  in  selected  cases,  but  with  the 
additional  values  saved  by  the  new  process  would  pay  handsomely. 
There  was  a  great  revival  of  the  gold  industry,  which  has  grown  rapidly 
ever  since. 

It  would  be  hardly  proper  to  infer  that  the  whole  increase  of  gold 
production  is  due  to  the  cyanide  and  other  leaching  processes.  The 
old  sources  of  gold  supply  have  not  disappeared.  Placer  mining  in 
Alaska  has  developed  a  respectable  output.  Placer  mining  in  general 
has  been  aided  by  improvements  in  mechanical  appliances,  of  which  by 
far  the  most  important  is  the  dredge.  An  increasing  amount  of  gold  is 
also  obtained  by  the  smelters  as  a  by-product  of  lead  and  copper  ores. 
But  it  is  entirely  proper  to  state  that  since  1890  the  improvements  in 
gold-mining  practice  have  been  such  as  to  warrant  calling  this  period  a 
new  era  in  the  industry. 

Economic  Distribution  of  Gold  Ores. — On  economic  grounds  we 
cannot  follow  with  any  satisfaction  any  division  according  to  the  processes 
used.  Various  processes  are  often  used  simultaneously,  one  supplement- 
ing the  other.  I  plan  to  discuss  gold  mines  under  the  two  general  group- 
ings of  placer  deposits  and  vein  deposits.  Of  placer  deposits  nothing 
more  need  be  said  here. 

Gold  Veins  or  Gold  Deposits  in  Situ. — By  far  the  most  important 
source  of  gold  known  to-day  may  be  called,  for  want  of  a  better  name, 
the  quartz-pyrite  lode.  In  these  deposits  quartz  is  always  the  main 


OCCURRENCE  AND  PRODUCTION  'OF  GOLD  451 

constituent.  With  the  quartz  there  is  always  a  certain  proportion  of 
iron  pyrite,  usually  less  than  5  per  cent,  of  the  mass,  but  varying  from  }/± 
per  cent,  to  50  per  cent.  Sulphides  of  lead,  copper,  and  zinc  may  also 
be  present,  but  usually  in  very  subsidiary  quantities.  The  lodes  occur 
in  every  conceivable  attitude  and  manner.  They  are  of  every  geological 
age  from  the  oldest  to  the  youngest.  The  ores  may  fill  open  crevices  or 
fissures  caused  by  shrinkng  or  faulting  in  the  rocks,  they  may  be  re- 
placements of  other  rocks,  they  may  simply  fill  up  the  interstices  of 
pebbly  beds  or  conglomerate.  In  all  cases  it  is  highly  probable  that 
quartz-pyrite  ores  were  deposited  by  hot  waters  of  deep-seated  origin.  In 
many  cases  there  is  reason  to  believe  they  came  from  "magmatic" 
waters,  waters  once  included  in  molten  rock  masses,  that  escaped  when 
the  pressure  was  released.  In  almost  all  cases  there  is  some  reason  to 
believe  that  these  deposits  have  a  connection,  not  always  explained, 
with  igneous  rocks. 

These  ores  occur  in  large  volume.  In  many  cases  millions  of  tons 
are  in  sight.  The  Treadwell  group  in  Alaska  has  mined  14,000,000 
tons  and  reports  7,000,000  in  sight,  averaging  $2.40  per  ton.  The 
Witwatersrand  mines  have  treated  114,000,000  tons  and  expect  to  mine 
some  500,000,000  tons  more,  averaging  $7  or  $8  a  ton.  Four  mines  in 
the  Mysore  group  in  India  have  mined  7,300,000  tons,  averaging  $18.40 
per  ton,  and  have  in  sight  1,400,000  tons  averaging  $20.  Three  mines  at 
El  Oro,  Mexico,  have  produced  2,450,000  tons  averaging  $16  per  ton, 
and  have  in  sight  some  900,000  tons  averaging  $11.  The  Witwatersrand 
mines  are  now  treating  20,000,000  tons  a  year.  These  figures  show  that 
this  class  of  gold  mines  constitute  a  great  industry  carried  on  under  con- 
ditions of  stability  not  inferior  to  those  of  other  kinds  of  mines.  It  will 
be  shown  later  that  they  are  as  profitable  as  any. 

In  these  ores  the  gold  is  said  to  be  almost  entirely  in  a  metallic  state, 
scattered  through  the  gangue  in  particles  of  varying  size.  Sometimes, 
for  instance,  at  the  North  Star  mine,  in  California,  90  per  cent,  of  the 
gold  can  be  recovered  by  amalgamation.  In  other  cases,  as  at  El  Oro, 
Mexico,  and  Goldfield,  Nevada,  only  10  per  cent,  or  even  less  will  amal- 
gamate. The  difference  is  due  not  to  the  state  of  the  metal  itself  but  to 
its  degree  of  subdivision.  In  some  cases  the  gold  is  in  such  minute  par- 
ticles that,  even  with  the  finest  grinding,  it  still  remains  partly  imbedded 
in  particles  of  gangue.  The  gold  is  much  more  apt  to  be  imbedded  in 
the  sulphides  than  in  the  quartz,  hence  it  often  happens  that  the  altera- 
tion of  the  sulphides  by  artificial  oxidation  or  roasting  sets  free  a  good 
deal  of  it.  But  in  this  class  of  gold  ores  roasting  is  practically  never 
necessary  for  a  good  extraction  by  leaching  processes.  It  is  here  that 
the  cyanide  process  has  its  great  field. 

Cost  of  Mining  and  Milling  Quartz-Pyrite  Ores. — In  both  mining 
and  milling  the  cost  is  most  affected  by  two  dominant  factors: 


452  THE  COST  OF  MINING 

(a)  The  richness  of  the  ore. 

(6)  The  size  of  the  deposits. 

The  richness  of  the  ore  affects  both  departments  of  the  operation 
through  its  effect  on  the  elaboration  of  processes.  In  the  case  of  low- 
grade  ores  the  process  must  be  cheap,  therefore  cheapness  is  secured  if 
necessary  by  sacrificing  part  of  the  ore  in  both  mining  and  milling.  In 
the  case  of  the  Treadwell  an  ore  is  mined  that  assays  $2.70  per  ton.  It 
is  mined,  let  us  say,  for  $1.15  and  milled  for  $0.35  with  an  extraction  of 
75  per  cent,  by  mining  and  90  per  cent,  by  milling,  making  a  total  sav- 
ing of  67J^  per  cent.  The  profit  per  ton  actually  milled  is  $0.93.  Now 
to  save  more  of  the  ore,  to  save  90  per  cent.,  would  involve  the  institu- 
tion of  another  method  of  mining  which  would  certainly  be  more  expen- 
sive. Such  a  method  would  almost  certainly  cost  over  $2  a  ton  and  would 
therefore  wipe  out  the  profits  altogether.  In  the  case  of  milling  the  only 
improvement  that  should  be  made  would  be  by  cyaniding  the  tailings 
which  only  run  27  cents  a  ton.  Under  the  most  favorable  conditions 
this  would  not  pay. 

But  if  we  consider  the  Mysore  mines  in  the  same  light  we  get  utterly 
different  results.  These  ores  assay  $20  a  ton.  To  sacrifice  25  per  cent, 
in  mining  such  ores  would  be  to  leave  $5  per  ton  in  the  ground.  To 
spend  $3  or  $4  a  ton  more  to  secure  this  would  be  entirely  proper,  al- 
though such  a  figure  is  twice  the  whole  cost  of  the  Treadwell  process. 
In  milling  a  loss  of  10  per  cent,  means  $2  a  ton,  and  likewise,  to  spend 
say  $1  per  ton  more  to  save  half  the  loss  would  be  good  business.  In  a 
word,  the  cost  of  $10  a  ton  for  the  Mysore  ores  may  be  just  as  sound  busi- 
ness as  the  cost  of  $1.50  at  the  Treadwell;  and  this  for  no  other  reason 
than  the  greater  value  of  the  ore. 

Size  of  Orebodies. — With  orebodies  of  the  same  <*ize  we  may  vary  the 
cost  within  wide  limits  at  will,  as  just  shown;  but  human  will  has  no 
effect  on  the  size  of  orebodies:  we  must  take  them  as  they  are.  The 
size  and  attitude  of  the  masses  to  be  attacked  hedge  the  cost  of  mining 
with  limitations  even  more  arbitrary  than  those  imposed  by  the  grade. 
A  uniform  bed  6  ft.  thick  of  ore  of  this  character  can  be  handled  at  a 
total  cost,  on  average  conditions  throughout  the  world,  of  $3  a  ton. 
A  bed  4  ft.  thick  will  cost  somewhat  more,  say  $3.50  a  ton.  Below  4 
ft.  the  cost  will  rise  almost  in  inverse  ratio  to  the  thickness,  so  that  a  seam 
1  ft.  thick  will  cost  $14  a  ton,  and  so  on.  Now  it  often  happens  that  most 
important  gold  ores  do  occur  in  such  narrow  streaks.  In  the  Witwaters- 
rand  the  values  are  usually  confined  to  streaks  from  4  inches  to  16 
inches  thick,  worth  from  $20  to  $100  a  ton.  Under  the  cost  conditions 
ruling  in  that  district  a  4-inch  seam  would  cost  approximately  $60  a 
ton.  This  would  leave  a  profit,  supposing  the  ore  to  assay  $100  a  ton 
and  that  the  extraction  is  95  per  cent.,  of  $35  a  ton,  equal  to  35  per  cent, 
of  the  assay  value.  But  mining  is  not  conducted  that  way.  Such  a 


OCCURRENCE  AND  PRODUCTION  OF  GOLD  453 

seam  is  mined  in  a  stope  at  least  4  ft.  wide;  the  ore  seam  is  mixed  with 
an  enormous  amount  of  waste,  ten  or  eleven  times  as  much  waste  as  ore. 
The  ore  going  to  the  mill  will  run  only  $8  a  ton  and  the  cost  is  $5;  but 
the  proportion  of  profit  is  about  the  same.  Wherever  it  is  possible  to 
mine  such  seams  by  themselves,  it  should  be  done;  but  on  account  of  the 
friable  nature  of  the  streaks,  in  many  cases  there  is  so  much  danger  of 
loss  in  breaking  the  ore  that  it  is  considered  safer  to  mill  most  of  the  stuff 
broken  regardless  of  its  value. 

But  these  considerations  do  not  affect  the  real  cost  of  mining.  In 
the  case  cited  above  the  real  orebody  is  only  4  in.  thick  and  the  cost  is 
$60  a  ton.  That  the  value  is  diluted  and  the  cost  lower  is  only  a  matter 
of  convenience.  That  such  orebodies  would  be  worthless  if  the  ore 
streaks  yielded  even  such  apparently  attractive  assays  as  $40,  $20,  to  say 
nothing  of  $5,  a  ton  is  too  obvious  to  argue  about.  Strange  as  it  may 
seem,  great  quantities  of  money  are  lost  by  attempting  just  such  im- 
possibilities. 

Other  Causes  of  Variation  — Quartz-pyrite  ores  are  metallurgically 
simple,  and  outside  of  the  two  great  factors  mentioned  above  there  is 
nothing  to  make  very  great  differences  in  cost.  So  far  as  underground 
operations  go  the  variations  are  so  nearly  wholly  due  to  those  factors 
that  others  may  be  neglected.  In  milling,  the  metallurgical  problem, 
on  average  ores  of  say  $10  a  ton,  will  cause  variations  between  a  mini- 
mum of  about  75  cents  and  a  maximum  of  about  $2. 

The  process  is  in  principle  uniform  throughout  the  world.  It  con- 
sists of  one  or  all  of  the  following  steps: 

1.  Amalgamation  after  crushing  in  stamp  batteries. 

2.  Concentration  of  refractory  sulphides. 

3.  Leaching  of  tailings  (or,  in  some  cases,  the  original  ore)  by  cya- 
nide or  other  solutions. 

Where  concentration  is  undertaken,  it  is  only  in  order  to  apply  some 
special  process  to  a  small  fraction  of  the  ore.  Such  a  process  may  be 
instituted  at  the  mine,  or  the  concentrates  may  be  shipped  to  custom 
plants;  but  in  any  case  the  cost  as  applied  to  the  crude  ore  is  never  very 
high,  because  for  each  ton  of  concentrates  there  will  be  from  10  to  100 
tons  of  crude. 

So  many  examples  of  the  cost  of  these  processes  in  actual  practice 
will  be  found  in  the  following  chapters,  that  I  shall  not  discuss  them 
further  here. 

Other  Gold  Ores. — In  the  type  discussed  above  the  gold  is  in  the  ore 
free,  or  native,  i.e.,  it  is  mixed  mechanically,  not  chemically,  with  the 
gangue.  In  Cripple  Creek,  Colorado;  Kalgoorli,  West  Australia,  and 
in  a  number  of  other  less  important  districts,  the  gold  occurs  to  a  large 
extent  as  a  true  ore,  namely  as  tellurides.  Here  the  gold  is  involved  in  a 
chemical  combination  with  tellurium  and  to  a  less  extent  with  other 


454 


THE  COST  OF  MINING 


elements.  Here  amalgamation,  except  to  a  limited  extent  in  the  oxid- 
ized zone,  is  utterly  ine^ective.  Dependence  must  be  had  on  smelting 
or  on  leaching  processes  of  a  type  inherently  more  expensive  than  those 
applied  to  quartz-pyrite  ores.  The  reason  for  this  is  that  in  the  raw 
state,  the  gold,  or  a  large  part  of  it,  will  not  desert  its  companion  miner- 
als to  unite  with  those  offered  by  the  leaching  solutions.  To  get  around 
this  difficulty  it  is  necessary  to  break  up  the  tellurides  by  roasting  before 
attempting  to  leach.  To  do  this  costs  $1.50  a  ton.  This  cost  is  not 
wholly  for  the  roasting  itself,  but  is  due  partly  to  the  fact  that  ordinary 
wet  crushing  by  stamps  is  not  desirable  when  roasting  is  to  be  done.  It 
is  necessary  to  resort  to  the  much  more  costly  process  of  dry  crushing. 


PRODUCTION  OF  GOLD  IN  THE  UNITED  STATES,  BY  STATES  (a) 


States 

1915 

1916 

1917 

1918 

Fine 
Ounces 

Value 

(b) 

Fine 
Ounces 

Value 

(b)   , 

Fine 
Ounces 

Value 
(b) 

Fine 
Ounces 

Value 

(b) 

Alabama  
Alaska 

247 
808,346 
220,392 
1,090,731 
1,089,928 
1,684 
56,6,28 

$5,100 
16,710,000 
4,555,900 
22,547,400 
22,530,800 
34,800 
1,170,600 

358 
780,037 
197,989 
1,063,302 
928,075 
987 
51,195 

$7,400 
16,124,800 
4,092,800 
21,980,400 
19,185,000 
20,400 
1,058,300 

106 
709,729 
250,613 
1,012,461 
772,766 
314 
36,511 
15 
177,690 
335,361 
52,505 
524 
81,624 
82 
356,662 
267 
5 
170,353 
5 
63 
23,617 
179 

$2,200 
14,671,400 
5,180,600 
20,920,400 
15,974,500 
6,500 
754,800 
300 
3,673,200 
6,932,500 
1,085,400 
10,800 
1,687,300 
1,700 
7,372,900 
5,500 
100 
3,522,100 
100 
1,300 
488,200 
3,700 

36 
440,622 
278,647 
842,389 
621,791 
169 
30,764 
10 
153,375 
322,276 
30,871 
38 
60,951 

328,305 
263 
5 
152,018 
47 
20 
16,556 
18 

$700 
9,108,500 
5,760,200 
17,207,000 
12,853,500 
3,500 
636,000 
200 
3,170,600 
6,662,000 
638,200 
800 
1,260,000 

'6,786,766 
5,400 
100 
3,142,500 
800 
400 
342,300 
400 

Arizona  
California  
Colorado.  
Georgia  
Idaho  
Missouri  
Montana  
Nevada  
New  Mexico  
North  Carolina  .... 
Oregon  
South  Carolina.  .  .  . 
South  Dakota  
Tennessee  
Texas  
Utah  
Vermont  
Virginia  
Washington  
Wyoming  

Total  

Porto  Rico  
Philippine 
Islands  

Total  

240,825 
574,874 
70,632 
8,258 
90,321 
174 
358,145 
329 
87 
189,045 

"'24' 
.  22,330 
672 

4,978,300 
11,883,700 
1,460,100 
170,700 
1,867,100 
3,600 
7,403,500 
6,800 
1,800 
3,907,900 

'  '500 
461,600 
13,900 

209,386 
438,505 
65,306 
1,113 
91,985 
15 
361,444 
276 
24 
186,670 
14 
24 
28,087 
977 

4,328,400 
9,064,700 
1,350,000 
23,000 
1,901,500 
300 
7,471,700 
5,700 
500 
3,850,000 
300 
500 
580,600 
20,200 

4,825,311 
34 
63,898 

899,748,000 
700 
1,320,900 

4,405,778 
29 
73,249 

$91,075,500 
600 
1,514,200 

3,981,482 
5 
69,953 

$82,304,500 
100 
1,446,100 

3,269,171 
44,202 

$67,579,800 
913,700 

4,887,604 

$101,035,700 

4,479,056 

$92,590,300 

4,051,440 

$83,750,700 

3,313,373 

$68,493,500 

(a)  The  statistics  in  this  table  are  reported  by  the  Director  of  the  Mint,  those  for  1918  being  the 
preliminary  figures.     (6)  At  $20.67  per  oz. 

After  roasting  the  processes  usually  proceed,  so  far  as  cost  goes,  about 
as  in  the  case  of  quartz-pyrite  ores  of  pretty  high  grade;  for  these  tellu- 
rides ores  are,  on  account  of  the  high  working  cost,  invariably  of  fairly 
high  grade.  They  are  often  concentrated  a  good  deal  by  hand  sorting, 
so  that  when  I  speak  of  high  grade  I  mean  when  they  get  to  the  mill  or 
smelter.  Referring  to  the  rock  actually  broken  in  the  stopes,  the  mini- 
mum grade  of  this  type  of  ore  that  can  be  profitably  worked  is,  under 
present  conditions,  about  $8  a  ton. 


OCCURRENCE  AND  PRODUCTION  OF  GOLD  455 

Cost  of  Producing  Gold  per  Ounce.— It  is  to  be  remembered  that  fine 
gold  is  worth  $20.67  per  ounce.  In  order  to  gain  some  idea  of  the  pro- 
portion of  profit  in  gold  mining  as  compared  with  other  metals  we  may 
conveniently  take  the  cost  per  ounce  as  an  index.  It  is  a  current  state- 
ment that  gold  costs  more  than  it  is  worth.  If  one  were  to  charge  up 
against  it  the  fruitless  explorations  and  unprofitable  enterprises  of  which 
it  is  the  object  it  is  impossible  to  conjecture  how  near  true  this  statement 
might  prove  to  be.  Very  likely  those  responsible  for  the  statement 
and  who  believe  it  have  never  gone  beyond  the  point  of  making  a  guess. 
In  my  judgment  the  statement  is  not  any  more  true  with  reference  to 
gold  than  with  any  other  metal.  Just  as  the  selling  price  of  copper 
is  determined  in  the  main  by  the  costs  obtained  by  the  successful  enter- 
prises which  are  responsible  for  the  major  portion  of  the  output,  so  the 
value  of  gold  is  established  by  the  correspondingly  successful  properties 
and  districts  which  yield  the  greater  part  of  it. 

In  the  Transvaal  the  proportion  of  total  yield  of  gold  that  has  been 
paid  in  dividends  is  almost  exactly  25  per  cent.  The  cost  of  gold,  there- 
fore, in  this  district  which  is  yielding  one-third  of  the  world's  output 
has  been  to  date  three-quarters  of  $20.67,  or  about  $15.50  an  ounce. 
This  proportion  is  holding  good  at  present,  the  record  for  the  year  1918 
showing  dividends  equal  to  24  per  cent,  of  the  gross  value  produced, 
indicating  a  cost  per  ounce  of  about  $15.70. 

We  might  compare  the  record  of  the  Robinson,  at  present  the  world's 
most  profitable  gold  mine,  against  the  Calumet  &  Hecla,  the  world's 
most  profitable  copper  mine.  The  comparison  is  approximately  as 
follows: 

The  Calumet  &  Hecla:  gross  value  of  yield  about  $312,000,000; 
dividends  $108,500,000,  which  is  35  per  cent. 

The  Robinson  mine:  gross  value  of  yield  $60,000,000;  dividends 
$32,000,000,  equal  to  54  per  cent. 

In  Cripple  Creek,  Colorado,  I  estimate  the  cost  of  gold  to  have 
averaged  about  $17  per  oz.  or  82  per  cent,  of  its  value,  while  the  prin- 
cipal mine — the  Portland — has  secured  gold  at  a  cost  of  $14.50  per  oz. 
or  70  per  cent,  of  its  value. 

In  Kalgoorlie,  West  Australia,  I  have  no  figures  for  the  district  at 
large,  but  seven  or  eight  of  the  leading  mines  have  paid  dividends  equal 
to  approximately  40  per  cent,  of  the  yield  in  gold,  so  that  the  cost  per 
ounce  is  only  $12.40.  These  mines  have  furnished  so  large  a  proportion 
of  the  total  yield  of  that  district  that  it  seems  safe  to  conclude  that  the 
cost  of  the  entire  yield  has  not  exceeded  $15  per  oz. 

In  the  Kolar  district  of  India,  the  four  leading  mines  responsible  for 
nearly  all  the  output  paid  dividends  equal  to  44  per  cent,  of  the  gross 
value.  Hence  we  conclude  that  the  cost  of  gold  has  not  exceeded  $12 
for  those  mines,  and  probably  not  over  $14  for  the  entire  district. 


456 


THE  COST  OF  MINING 


GOLD  AND  SILVER  PRODUCTION  OF  THE  WORLD,  1493-1850 
According  to  Dr.  Adolph  Soetbeer 


Period 

Estimated  pro- 
duction in 
kilograms 

Ratio  of 
silver  to 
gold, 
weight 

Ratio  of 
gold  to 
silver, 
value 

Period 

Estimated  pro- 
duction in 
kilograms 

Ratio  of 
silver  to 
gold, 
weight 

Ratio  of 
gold  to 
silver, 
value 

Gold 

Silver 

Gold 

Silver 

1493-1520 
1521-1544 

162,400 
171,840 

1,316,000 
2,164,800 

8.1 
12.6 

10.75 
11.25 

1701-1720 
1721-1740 

256,400 
381,600 

7,112,000 
8,624,000 

27.7 
22.6 

15.21 

15.08 

1545-1560 

136,160 

4,985,600 

36.6 

11.30 

1740-1760 

492,200 

10,662,900 

21.7 

14.75 

1561-1580 

136,800 

5,990,000 

43.8 

11.50 

1761-1780 

414,100 

13,054,800 

31.5 

14  .  73 

1581-1600 

147,600 

8,378,000 

56.8 

11.80 

1781-1800 

355,800 

17,581,200 

49.4 

15.09 

1601-1620 

170,400 

8,458,000 

49.6 

12.25 

1801-1810 

177,780 

8,941,500 

50.3 

15.61 

1621-1640 

166,000 

7,872,000 

47.4 

14.00 

1811-1820 

114,450 

5,407,700 

47.2 

15.51 

1641-1660 
1661-1680 

175,400 
185,200 

7,326,000 
6,740,000 

41.8 
36.4 

14.50 
15.00 

1821-1830 
1831-1840 

142,160 
202,890 

4,605,600 
5,964,500 

32.4 
29.4 

15.80 
15.75 

1681-1700 

215,300 

6,838,000 

31.8 

14.97 

1841-1850 

547,590 

7,804,150 

14.3 

15.83 

GOLD  PRODUCTION  OF  THE  WORLD.  1851-1918 


Year 

Value 

Year 

Value                Year 

Value 

Year 

Value 

1851  

$67,600,000 

1871  

$107,000,000 

1891.... 

$130,650,000 

1911  

$464,346,495 

1852  

132,800,000 

1872  

99,600,000 

1892.... 

146,292,600 

1912.... 

474,322,664 

1853  

155,500,000 

1873  

96,200,000 

1893.... 

158,437,551 

1913.... 

462,669,558 

1854  

127,500,000 

1874  

90,800,000 

1894.... 

182,509,283 

1914  

439,078,260 

1855  

135,100,000 

1875  

97,500,000 

1895.... 

198,995,741 

1915  

470,466,200 

1856  

147,600,000 

1876  

103,700,000 

1896.... 

211,242,081 

1916  

454,176,500 

1857  

133,300,000 

1877  

114,000,000 

1897.... 

237,833,984 

1917  

423,590,200 

1858  

124,700,000 

1878  

119,000,000 

1898.... 

287,327,833 

1918  

373,000,000 

1859  

124,900,000 

1879  

109,000,000 

1899  

311,505,947 

1860  

119,300,000 

1880  

106,600,000 

1900  

258,829,703 

1861  

113,800,000 

1881  

103,102,000 

1901.  .  . 

260,877,429 

1862  

107,800,000 

1882  

102,000,000 

1902  

298,812,493 

1863  

107,000,000 

1883  

95,400,000 

1903  

329,475,401 

1864  

113,000,000 

1884  

101,700,000 

1904  

349,088,293 

1865  

120,200,000 

1885  

108,400,000 

|   1905.... 

378,411,754 

1866  

121,000,000 

1886  

106,000,000 

1    1906.  .  . 

405,551,022 

1867  

104,000,000 

1887  

105,775,000 

1907.... 

416,101,396 

1868  

109,700,000 

1888  

110,197,000 

1908  

443,355,856 

1869  

106,200,000 

1889  

123,489,000 

1909  

458,424,058 

1870  

100,900,000 

1890  

118,848,700 

1910  

453,766,523 

GOLD  PRODUCTION  OF  THE  WORLD,  BY  COUNTRIES1 

1916  1917                        1918 

Transvaal $192,182,900  $186,503,400  $173,479,000 

Rhodesia 10,232,200  17,245,000       12,862,000 

West  Africa 7,860,100  7,445,600         6,467,000 

Kongo,  Madagascar,  etc 3,673,700  3,420,000         3,200,000 


Total  Africa $222,948,900  $214,614,000  $196,008,900 


United  States $92,590,300 

Mexico 7,690,700 

Canada 19,235,000 

Central  America 3,517,600 


$83,750,700 

9,000,000 

15,200,000 

3,122,000 


$68,493,500 

10,000,000 

14,687,000 

3,000,000 


Total  North  America $123,033,600  $111,072,700     $96,180,500 

figures  for  1916  and  1917  from  Mint  Report,  1918  estimated. 


OCCURRENCE  AND  PRODUCTION  OF  GOLD 


457 


Russia,  including  Siberia $22,500,000 

France 1,000,000 

Other  Europe 1,019,900 


$18,000,000 

700,000 

1,017,000 


$10,000,000 
500,000 
500,000 


Total  Europe $24,519,900     $19,717,000     $11,000,000 


British  India $11,206,500 

British  and  Dutch  E.  Indies 3,000,000 

Japan  and  Chosen 9,308,000 

China  and  others 4,495,400 


$10,756,800 
2,818,000 
9,006,200 
5,035,400 


$10,029,000 
2,500,000 
8,500,000 
4,500,000 


Total  Asia,  not  including  Siberia $28,009,900     $27,606,400    $25,529,000 


South  America 

Australasia. . 


$15,188,400 
40,475,800 


$14,634,600 
35,945,500 


$14,000,000 
29,800,000 


Total  for  world 


$454,176,500  $423,590,200  $372,518,400 


At  El  Oro,  Mexico,  the  record  of  the  three  leading  mines  shows  profits 
of  40  per  cent.,  indicating  cost  of  gold  of  only  $12  per  oz.  It  is  not  at  all 
probable  that  the  fruitless  prospecting  in  that  district  would  bring  the 
total  cost  up  to  more  than  $14. 

While  it  is  not  probable  that  such  favorable  showings  for  gold- 
mining  districts  can  be  extended  to  cover  the  whole  list  of  districts,  it 
is  evident  that  the  successful  gold  mines  are  fully  as  profitable  as  suc- 
cessful copper  mines.  The  value  of  gold  produced  in  the  world  is  almost 
twice  the  value  of  the  copper  production,  so  that  I  feel  warranted  in 
saying  that  the  current  belief  that  copper  mining  is  the  most  profitable 
form  of  mining  enterprise,  and  that  gold  mining  is  one  of  the  least  profit- 
able, is  far  from  justified.  It  is  to  be  remarked,  however,  that  in  the 
United  States  copper  is  a  more  important  product  than  gold  and  it  is 
in  the  hands  of  a  smaller  number  of  much  larger  concerns,  which  have 
paid  larger  dividends  than  any  individual  gold  mine.  In  the  world  at 
large  the  reverse  is  true.  This  was  in  1908. 

In  1918,  owing  partly  to  the  change  of  prices,  partly  to  the  change  in 
relative  production,  the  value  of  copper  produced  was  nearly  twice  that 
of  the  gold. 

If  one  were  looking  for  an  example  of  the  comparative  instability  of 
precious-metal  mines,  and  the  dependence  of  the  world  for  its  supplies 
upon  a  constant  search  for  deposits  in  all  parts  of  the  world,  one  would 
need  go  no  further  than  to  note  the  changes  in  the  list  of  representative 
gold  mines,  selected  particularly  because  they  seemed  the  most  substan- 
tial of  their  type.  In  the  short  interval  of  ten  years  the  Alaska-Treatiwell 
group  has  practically  gone  out  of  existence.  So  has  the  Camp  Bird, 
El  Oro  and  Esperanza,  the  Robinson,  the  principal  Kalgurli  mines,  and 
the  Goldfield  Consolidated.  Of  those  still  running,  in  some  cases  with  a 
marked  decrease  of  prosperity,  one  may  name  only  the  Homestake,  the 


458  THE  COST  OF  MINING 

Liberty  Bell,  the  Kolar  mines,  and  the  Portland.  Thus  the  operations 
that  have  practically  vanished  are  about  ten  out  of  seventeen,  about 
60  per  cent. 

Decline  in  Producing  Districts  and  Little  Progress  in  Metallurgical 
Methods. — This  is  not  all.  In  the  interval  two  great  projects  in  Alaska 
for  mining  the  low-grade  gold  ores  of  the  Juneau  district  have  been  ini- 
tiated, supported  enthusiastically,  and  have  proved  themselves  dismal 
failures.  Districts  have  not  been  so  roughly  treated  as  individual  mines, 
but  even  districts  have  so  nearly  lost  their  importance  that  it  is  scarcely 
an  exaggeration  to  say  they  have  vanished.  To  specify  such  vanishing 
districts  one  may  name  Douglas  Island,  Juneau,  Ouray,  Goldfield, 
El  Oro  and  Kalgurli.  In  Cripple  Creek  and  Kolar  the  output  is  steadily 
on  the  decline.  Only  at  the  Homestake  and  the  Transvaal  has  there  been 
an  increase.  The  latter  district  produces  half  the  gold  of  the  world,  but 
substantially  from  a  new  group  of  operations,  which,  however,  merely 
represent  a  migration,  enforced,  of  course,  to  lower  levels  and  outlying 
tracts. 

So  far  as  I  can  learn,  not  a  single  radical  or  even  important  change  in 
the  processes  of  gold  mining  has  taken  root  during  the  last  ten  years. 
The  appliances  are  the  same  to  all  intents  and  purposes,  although  there 
has  been  a  considerable  substitution  of  ball  mills  for  stamps,  some 
improvements  in  drilling  machines,  and  some  changes  in  cyanide  practice. 
But  the  ground  work  is  the  same,  and  results  are  about  the  same.  The 
grand  feature  of  the  history  of  the  business  has  been  the  progress  of  an 
economic  cycle  unfavorable  to  gold  mining. 


CHAPTER  XXVII 
QUARTZ-PYRITE  GOLD  MINES 

TREADWELL  GROUP  IN  ALASKA— EXHIBIT  OF  CONDITIONS  AND  COSTS — HOMESTAKE — 
SAN  JUAN  REGION  IN  COLORADO — CAMP  BIRD — LIBERTY  BELL — EL  ORO  DISTRICT 

IN     MEXICO ESPERANZA     AND     EL     ORO     MINES KOLAR    DISTRICT    IN    MYSORE, 

INDIA — DETAILS  OF  COST  FACTORS — RECORDS  OF  THE  MINES — A  QUESTION  OF 

BOOKKEEPING WlTWATERSRAND AVERAGE  RESULTS THE  ROBINSON  MINE 

GENERALIZATIONS  ON  THE  PRICE  OF  LABOR  AND  COSTS. 

Included  in  the  class  of  quartz-pyrite  mines  are  all  of  the  properties 
of  the  Witwatersrand  in  the  Transvaal,  in  fact  all  the  gold  mines  of  South 
Africa,  nearly  all  the  mines  in  eastern  Australia,  those  of  the  Kolar  dis- 
trict in  India,  of  El  Oro  in  Mexico,  of  California,  Nevada,  and  Douglas 
Island,  Alaska.  In  general,  these  ores  are  a  light-colored  or  whitish 
quartz  containing  from  0.25  to  10  per  cent,  of  iron  pyrite  and  other  sul- 
phides in  varying  but  usually  subsidiary  amounts.  The  quartz  and 
pyrite  may  fill  open  fissures,  or  they  may  be  replacements  of  country 
rock,  or  the  cementing  material  of  beds  of  conglomerate.  Deposits  of 
this  kind  have  proved  to  be  extensive,  often  persistent  to  great  depths, 
and  are  worked  on  a  grand  scale. 

Treadwell  Group. — The  group  of  mines  on  Douglas  Island,  Alaska, 
known  as  the  Treadwell,  Mexican,  and  Ready  Bullion,  furnish  ore  for 
780  stamps  at  the  rate  of  1,200,000  tons  a  year.  This  work  with  good 
reason  stands  at  the  head  of  the  list  of  quartz-pyrite  operations,  furnish- 
ing an  example  of  the  simplest  metallurgical  problem,  the  lowest  costs, 
and,  I  believe,  the  best  management  to  be  found  in  this  class  of  mining. 
The  external  and  internal  factors  which  affect  the  results  obtained  are  of 
great  interest  to  the  student  of  mine  economics. 

Robert  Kinzie,  later  superintendent  of  all  the  mines,  published  in 
Trans.,  A.  I.  M.  E.,  Vol.  XXXIV,  a  detailed  account  of  these  properties 
up  to  1902;  in  addition  to  this  we  have  the  full  and  excellent .  reports 
issued  by  the  companies.  On  the  whole  the  information  available  is 
definite  and  satisfactory. 

Along  a  great  porphyry  dike  which  cuts  the  black  slate  of  Douglas 
Island,  there  are  three  or  four  large  lenses  or  ore  shoots  where  the  dike 
has  been  profoundly  altered  and  silicified  by  the  action  of  magmatic 
waters.  The  largest  and  most  northerly  of  these  is  the  Treadwell  ore- 
body,  which  was  400  ft.  wide  and  1000  ft.  long  at  the  surface.  The 
Mexican  and  Ready  Bullion  orebodies  are  approximately  20  ft.  thick 

459 


460  THE  COST  OF  MINING 

and  from  500  to  1000  ft.  long  in  horizontal  section.  These  orebodies 
are  situated  within  a  stone's  throw  of  a  splendid  harbor  on  a  sheltered 
waterway,  which  extends  for  1000  miles  from  Puget  Sound  to  Skagway. 
The  most  convenient  and  cheapest  transportation  facilities  are  thus 
provided  for  coal,  timber,  and  other  supplies.  Concentrates,  in  the 
shape  of  auriferous  iron  pyrite,  are  shipped  800  miles  to  the  Tacoma 
smelter  at  a  cost  of  $1.72  per  ton.  The  climate,  though  rainy,  is  mild 
and  pleasant,  corresponding  to  that  of  Scotland  or  southern  Norway. 
While  wages  are  not  low,  according  to  some  standards  (averaging  about 
32  cents  per  hour  in  actual  cost),  I  believe  that  labor,  owing  to  its  effi- 
ciency, is  really  cheap.  In  addition  to  these  advantages  an  abundance 
of  water  power  is  available.  Little  pumping  is  necessary  in  the  mines. 
These  external  factors  are  so  favorable  as  to  be  quite  exceptional,  per- 
haps unrivaled. 

Internal  Factors. — The  internal  factors  are  also  exceptional.  The 
orebodies  are  large  and  firm;  standing  nearly  vertical  between  pretty 
solid  walls,  they  came  up  under  the  glacial  drift  in  large  masses  that 
could  be  attacked  in  open  pits.  The  metallurgical  problem  is  the 
simplest. 

Mining  these  orebodies,  therefore,  presented  to  the  management 
the  following  factors:  Several  million  tons  of  ore  favorably  situated  for 
cheap  handling,  but  containing  less  than  $3  per  ton.  To  make  the 
maximum  profit,  or  to  make  profits  at  all,  required  cheap  methods  both 
of  mining  and  milling. 

These  conditions  as  to  mining  were  met  at  the  beginning  by  the 
" milling"  method  in  an  open  pit;  and  as  to  treatment  by  the  adoption 
of  a  large,  simple,  water-actuated  stamp  mill  in  which  ore  could  be  amal- 
gamated and  concentrated  in  wholesale  quantities  and  at  minimum  cost. 
The  simple  metallurgical  treatment  proved  amply  effective,  for  the  ore 
is  thus  treated  at  a  cost  of  17  to  27  cents  a  ton  with  an  apparent  extrac- 
tion of  90  per  cent. 

As  the  mining  proceeded  it  became  increasingly  difficult  and  finally 
impossible  to  maintain  the  required  output  from  open  pits  and  it  became 
again  imperative  to  devise  a  method  of  mining,  this  time  underground, 
that  would  be  cheap  enough.  It  was  a  broader  problem  than  the  first 
because  it  involved  the  question  of  how  much  ore  could  be  sacrificed  on 
the  one  hand  and  how  cheap  the  mining  could  be  done  on  the  other. 
It  was  discovered  that  about  75  per  cent,  of  the  ore  could  be  mined  with- 
out timbers  from  large  chambers  kept  full  of  broken  ore,  only  enough 
being  drawn  off  at  the  bottom  to  afford  room  for  the  miners  at  the  top. 
In  the  widest  deposit  this  process  costs  $1.00  per  ton  and  in  the  narrower 
bodies  $1.20  per  ton. 

No  change  being  required  in  milling  methods  on  account  of  increasing 
depth  the  inauguration  of  the  method  of  mining  described  seems  to  have 


QUARTZ-PYRITE  GOLD  MINES 


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QUARTZ-PYRITE  GOLD  MINES 


463 


solved  the  problem  of  making  these  ore-bodies  pay  to  an  indefinite  depth 
as  long  as  they  maintain  anything  like  their  present  size  and  value. 

The  milling  of  the  Treadwell  ores,  its  results,  the  collection  and  ship- 
ment of  concentrates,  are  all  shown  up  to  1902  in  the  accompanying 
tables  given  by  Mr.  Kinzie.  It  is  well  to  note  that  in  each  of  the  mines 
the  value  recovered  is  about  equally  divided  between  free  gold  saved 
by  amalgamation,  and  auriferous  pyrite  which  constitutes  2  per  cent,  or 
less  of  the  original  ore.  The  shipment  and  treatment  of  these  concen- 
trates costs  about  $6.75  a  ton  and  when  spread  over  the  original  ore  milled 
costs  from  10  to  14  cents  a  ton. 

The  actual  results  and  average  costs  up  to  the  end  of  the  reports 
for  1907  for  the  various  mines  are  as  follows: 


Treadwell 

Mexican 

Ready 
Bullion 

Tons  milled  

8  485  085 

2  447  063 

1  841  07Q 

Tons  in  sight  

4  982  883 

794  924 

1  378  651 

Feet  development  work,  14  years  
Tons  developed  per  foot  approximate  .  . 

74,717 
120 

59,960 
54 

27,362 
100 

Total  value  recovered  per  ton  

$2  44 

$2  55 

$1  89 

Profits,  operating,  per  ton  

1  16 

0  77 

0  25 

Total  operating  cost  per  ton 

1  28 

1  78 

1  64 

Last  depreciation  figures  

0  21 

0  23 

0  35 

Total  estimated  cost  

1.49 

2  01 

1  99 

From  the  above  it  appears  that  the  Treadwell  and  Mexican  mines 
have  been  very  profitable, /but  that  the  Ready  Bullion  has  not  as  yet 
earned  enough  to  justify  the  investment,  but  the  improvements  in  grade 
at  the  bottom  is  such  as  to  be  very  promising  for  the  future.  It  further 
appears  that  the  combined  mines  have  treated  12,773,227  tons  of  quartz 
worth  $30,446,947  or  $2.38  per  ton  for  a  total  operating  cost  of  $1.43 
per  ton,  to  which  is  to  be  added  24  cents  a  ton  as  a  fair  estimate  (it  seems 
very  liberal)  of  the  value  of  the  plants  employed ;  the  total  to  be  estimated 
for  cost  being  $1.67  per  ton  and  the  profit  71  cents  or  30  per  cent,  of  the 
gross  value  recovered. 

Below  are  given,  more  in  detail,  the  cost  of  these  remarkable  mines, 
for  the  Treadwell  in  the  year  ending  May  31,  1907,  and  for  the  Mexican 
and  Ready  Bullion  for  the  calendar  year  1907,  the  ore  all  coming  from 
underground  stopes  except  12  per  cent,  of  the  Treadwell  ore  which  came 
from  an  open  pit.  In  each  case  the  costs,  while  not  the  lowest  on  record, 
are  quite  near  the  average.  I  believe  in  the  case  of  the  Treadwell  that 
the  costs  are  overstated,  certain  sums  being  credited  to  the  receipts 
which  might  logically  be  deducted  from  the  costs,  but  I  have  made  no 
attempt  to  change  the  figures  given. 


464 


THE  COST  OF  MINING 


Treadwell 

Mexican 

Ready 
Bullion 

Tons  milled                                             

702,953 

214,263 

213,370 

Cost  mining  and  development  
Milling                                                         

$1.00 
0.17 

$1.19 
0.27 

$1.00 
0.36 

Snipping  and  smelting  concentrates 

0.12 

0.12 

0.11 

General  expense                                         

0.04 

0.09 

0.07 

Construction  .                      .  .    .....  r  

0.04 

0.01 

0.01 

Total  operating  

$1.37 

$1.68 

$1.55 

Depreciation                                                   .    .  . 

0.21 

0.23 

0.35 

Grand  total 

$1.58 

$1.91 

$1.90 

Homestake. — From  the  Treadwell  group  one  naturally  turns  to  the 
Homestake  mine  in  the  Black  Hills,  South  Dakota,  to  make  comparisons. 
This  is  the  greatest  gold  mine  in  the  world  in  point  both  of  tonnage  and 
of  gross  value  produced.  In  eight  years  out  of  the  last  nine  the  output 
has  been  as  follows: 

Per  Ton 

Tons  milled 9,383,114 

Gold  recovered $34,638,518  $3.69 

Cost 28,587,300  3.04 

Profit 6,051,218  0.65 

It  is  to  be  observed  that  the  costs  are  nearly  twice  as  high  as  at  the 
Treadwell  group.  Why  the  difference  should  be  so  great  does  not  appear. 
One  is  tempted  to  suspect  that  the  management  may  have  had  something 
to  do  with  it,  although  nothing  is  more  dangerous  than  to  jump  at  such 
a  conclusion. 

The  external  conditions  are  not  so  favorable  as  at  Douglas  Island. 
The  wages  are  about  the  same,  but  there  is  not  such  a  good  supply  of 
water  and  timber,  and  transportation  is  more  costly.  The  cost  of  water 
alone  is  approximately  10  cents  a  ton -at  the  Homestake. 

The  internal  factors  would  appear  to  be  about  the  same.  A  vast 
body  of  silicified  slate  has  been  followed  from  the  surface  to  a  depth  of 
nearly  1600  ft.  The  thickness  is  several  hundred  feet.  The  metal- 
lurgical problem  seems  to  be  simple;  4.7  tons  are  crushed  per  stamp  per 
day.  Amalgamation  is  followed  by  cyaniding  the  tailings  at  the  very 
moderate  cost  of  18  cents  per  ton  stamped.  The  finer  slimes  receive 
a  further  treatment  not  described  in  the  reports. 

There  are  1000  stamps  employed  on  Homestake  ore  in  six  different 
mills.  The  whole  milling  process  in  1907  cost  as  follows  per  ton: 

Milling  and  amalgamating 44c. 

Cyaniding 18c. 

Slime  treatment  and  construction. .  24c. 


Total. 


86c. 


QUARTZ-PYRITE  GOLD  MINES  465 

The  recent  cost  for  mining  and  development  is  $2  a  ton.  For  mining 
at  the  rate  of  4000  tons  a  day  from  a  single  orebody  this  seems  high. 
Possibly  the  methods  are  too  good;  a  more  wasteful  one  might  be  more 
profitable.  Assuming  that  with  the  methods  that  have  been  used  the 
profit  now  averages  75  cents  a  ton,  it  is  demonstrable  that  the  adoption 
of  a  method  that  would  reduce  the  mining  cost  from  $2  to  $1.25  per  ton 
at  a  sacrifice  of  25  per  cent,  of  the  ore  now  saved  would  increase  the  value 
of  the  mine  60  per  cent.  If  on  the  present  basis  20,000,000  tons  would  be 
mined  in  fifteen  years  at  a  profit  of  $15,000,000,  the  present  value, 
figuring  interest  on  deferred  payments  at  4  per  cent.,  would  be  $11,111,000, 
On  the  other  basis,  15,000,000  tons  mined  in  eleven  years  at  a  profit  of 
$22,500,000  would  give  a  present  value  of  $17,700,000. 

MINES  OF  THE  SAN  JUAN  REGION,  COLORADO 

The  external  conditions  at  the  Camp  Bird  property  are  unfavorable. 
The  altitude  of  the  mine  is  11,200  ft.  in  steep  and  snowy  mountains. 
In  1906  a  snow  slide  destroyed  the  mill  and  delayed  operations  six 
months.  Wages  are  about  average  for  the  Rocky  Mountain  region,  but 
it  is  not  to  be  supposed  that  men  are  capable  of  sustaining  their  best 
exertions  at  such  an  altitude.  Supplies  have  to  be  hauled  several  miles 
from  the  railroad  station,  Ouray,  over  a  steep  mountain  road  often 
blocked  with  snow. 

The  internal  factors  are  as  follows :  The  ore  occurs  in  extensive  shoots 

CAMP  BIRD  MINE     FOR  THE  YEAR  ENDING  APRIL  30,1908 

Blocking  out  ore $0 . 64 

Ore  breaking 0 . 60 

Timbering 0. 69 

Loading  and  tramming 0 . 78 

Hoisting 0.18 

Lighting  and  pumping 0.15 

Engineering,  sampling,  and  assaying 0.10 

Foremen  and  bosses 0.17 

Power 0.32 

Maintenance 0 . 44 

Total  mining,  78,966  tons 4 . 08 

Transportation  to  mill 0.28 

Stamp  milling  80,087  tons 1 . 19 

Cyaniding 0.61 

Shipping  and  selling  concentrates 1 . 42 

General  expense,  consulting  engineer,  administration,  taxes,  etc .  1 . 50 

Depreciation  average  five  years 0 . 78 

Survey  of  unpatented  claims 0 . 06 

London  office  expense 0 . 35 

Total  cost  per  ton $10.27 

30 


466  THE  COST  OF  MINING 

in  a  nearly  vertical  quartz  vein  3  to  10  ft.  thick,  in  a  horizontal  formation 
of  bedded  porphyries.  In  a  total  length  of  4500  ft.  explored  there  are 
four  ore  shoots  aggregating  1700  ft.  long.  This  has  involved  an  expense 
for  development  of  76  cents  a  ton. 

Stoping  is  done  as  at  the  Treadwell  by  breaking  the  whole  vein  up- 
ward from  the  levels  and  drawing  out  only  enough  to  make  room  for 
the  miners,  Up  to  April,  1907,  about  489,000  tons  had  been  taken  out 
and  milled;  112,000  tons  remained  broken  in  the  stopes. 

Total  values  recovered  were  $25.90  per  ton;  of  these  74.76  per  cent, 
was  obtained  by  amalgamation;  16.02  per  cent,  by  concentration,  and 
9.22  per  cent,  by  cyaniding.  The  extraction  of  the  gold  is  given  at  93.84 
per  cent.  Adopting  this  as  a  rough  estimate  or  the  total  extraction  of 
all  metals,  we  get  $27.60  as  the  original  value  of  the  ore,  so  that  the  mill 
losses  are  approximately  $1.70  per  ton. 

It  is  interesting  to  compare  this  record  with  that  of  the  Mysore 
mine  in  India,  which  extracts  a  somewhat  lower  grade  of  ore  without 
any  expense  for  the  treatment  of  concentrates,  and  mined  ore  during  the 
same  year  at  a  cost  of  $9.25  a  ton,  although  the  wages  at  the  Mysore 
mine  seem  to  have  averaged  only  36  cents  a  day.  The  number  of  men 
employed  at  the  Camp  Bird  is  approximately  300  for  an  output  of  80,000 
tons,  while  at  the  Mysore  8334  are  employed  for  an  output  of  234,000  tons. 

It  appears  that  the  operations  for  the  year  given  above  were  cheaper 
than  for  former  years,  an  explanation  being  found  in  the  fact  that  some 
17,000  tons  of  ore  were  withdrawn  from  the  stopes  more  than  were 
broken  in  the  stopes,  and  because  the  tonnage  treated  during  the  year 
was  greater  than  ever  before  without  any  increase  in  the  amount  of 
general  expense.  During  the  past  three  years  184,605  tons  were  treated, 
averaging  $28.90  per  ton,  and  the  earnings  were  $16  a  ton,  leaving  $12.90 
as  the  actual  cost.  It  is  stated  that  the  extraction  reported  for  1908  was 
the  highest  on  record.  If  we  assume  that  the  extraction  has  averaged 
92  per  cent,  the  performance  of  the  mine  may  be  calculated  as  follows : 


value  of  ore : $31 . 40 

Loss  in  milling * 2 . 50 

Yield 28.90 

Total  operating   costs,   including   construction,   development, 

and  London  expenses 12 . 90 

Total  costs  and  losses 15 . 40 

Profit  per  ton 16 . 00 

Percentage  of  profit 51 . 00 

These  costs  are  much  higher  than  those  of  the  Liberty  Bell  mine  a 
few  miles  away.  The  reason  undoubtedly  is  the  higher  grade  of  the 
Camp  Bird  ores;  this  accounts  for  higher  costs  in  taxes,  freight,  and 
treatment,  etc.,  and  furnishes  the  excuse  for  pretty  liberal  fees  and 
management. 


QUARTZ-PYRITE  GOLD  MINES  467 

RESULTS  OF  OPERATIONS  AT  THE  LIBERTY  BELL  MINE 

Tons  mined  and  milled 510,720 

Net  receipts  per  ton $7 . 20 

Costs: 

General  expense $1  05 

Mining  and  development 2 . 65 

Tramming  to  mill 0  42 

Milling i  70 

Shipping  concentrates 0.36 


Total  operating $6 . 34 

Depreciation 0 . 30 


Total $6 .  64 

Profit  per  ton 0 . 56 

At  this  mine  26,446  ft.  of  opening  work  has  been'  done  in  nine  years, 
resulting  in  mining  and  developing  about  900,000  tons  of  ore,  or  34  tons 
to  1  ft.  The  cost  per  foot  of  development  seems  to  be  about  $10,  and 
per  ton  developed,  $0.30.  The  stoping  width  is  about  5  ft. 

Analyzing  roughly  the  di  ~."erence  between  the  costs  of  the  Camp  Bird 
and  the  Liberty  Bell  it  appears  that  the  former  is  more  expensive,  as 
follows: 

Per  ton 

Underground  cost $1 . 46 

Milling 0.15 

Treatment  charges 1.45 

General  expense 2 . 00 

Depreciation  of  plant 0 . 55 


Total $5.61 

It  may  be  fairly  said  that  the  higher  cost  at  the  Camp  Bird  for  milling 
and  treatment  charges  are  entirely  justified  by  the  higher  grade  of  the 
ore.  As  to  other  expenses  one  may  doubt  their  necessity. 

Other  mines  in  the  San  Juan  region  whose  reports  are  available  are 
the  Tomboy  and  the  Smuggler  Union.  I  have  not  investigated  these 
reports,  but  in  a  general  way  the  costs  at  these  mines  are  not  greatly 
different  from  those  of  the  Liberty  Bell.  These  mines  have  each  re- 
ported costs  lower  than  those  given,  for  a  single  year,  but  it  is  doubtful 
if  they  would  be  lower  if  figured  upon  a  long  term  of  years. 

In  general,  mining  in  the  San  Juan  region  costs  about  $7  a  ton.  The 
external  factors  of  a  rough  surface,  a  severe  climate,  costly  transportation 
and  a  debilitating  altitude  are  all  unfavorable.  The  internal  factors 
are  such  that  only  a  small  tonnage  can  be  maintained.  Metallurgically 
the  ores  are  only  fair,  and  while  not  markedly  difficult,  do  not  seem  to 
permit  of  full  treatment  at  a  cost  of  less  than  $2  a  ton.  The  explanation, 
therefore,  of  the  big  jump  in  costs  from  $1.50  at  the  Treadwell  and  $3 


468  THE  COST  OF  MINING 

at  the  Homestake  to  $7  in  the  San  Juan  is  the  cumulative  effect  of  a 
variety  of  both  external  and  internal  factors. 

EL  OHO,  MEXICO 

The  mines  at  El  Oro,  Mexico,  are  well  managed;  they  pay  good  divi- 
dends and  issue  good  reports.  The  two  principal  mines  are  the  Esper- 
anza  and  El  Oro  on  the  San  Rafael  vein  and  the  Dos  Estrellas  on  a  parallel 
vein  to  the  westward.  The  Mexico  mine  just  north  of  the  Esperanza 
on  the  San  Rafael  lode  is  promising.  The  veins  are  large  mineralized 
shear  zones  in  slate  or  shale.  There  are  numerous  cross  faults.  The 
veins  are  for  the  most  part  obscured  by  a  later  flow  of  andesitic  lava 
which  covers  the  important  orebodies  to  a  depth  of  several  hundred  feet. 
The  ore  is  quartz  with  pyrite  sprinkled  through  it.  The  gold  is  very 
finely  divided,  and  will  yield  by  amalgamation  only  about  15  per  cent. 

Grade  of  Ore  and  Output. — It  appears  that  the  Esperanza  mine  up  to 
the  end  of  1908  produced  1,176,117  tons  averaging  $19  per  ton,  and  El  Oro 
1,080,000  tons  to  the  end  of  1907  averaging  $11.39  per  ton,  in  both  cases 
by  actual  yield.  Probably  these  figures  indicate  average  ores  produced 
by  the  principal  mines  in  the  district.  If  so,  we  get  a  yield  of  $16.33. 
It  is  probable  that  the  extraction  has  averaged  something  like  88  per 
cent.,  so  that  the  assay  value  of  the  ore  as  mined  must  be  about  $18.50 
per  ton.  Two  distinct  types  of  ore  have  been  worked;  an  oxidized 
cyaniding  ore  averaging  about  $13  a  ton  by  assay  value,  by  extraction 
about  $11.40  as  stated  above  for  the  material  mined;  and  a  narrower 
vein  of  sulphides  discovered  and  worked  on  the  Esperanza,  and  lately 
on  the  Mexico  mine,  the  ore  from  which  has  been  treated  mainly  in  the 
smelters  and  has  been  of  high  grade,  much  of  it  running  three  or  four 
ounces  per  ton.  Below  are  given  the  figures  for  mining  and  milling  at 
the  El  Oro  and  Esperanza  up  to  the  end  of  1907,  since  which  time  the 
reports  indicate  nothing  to  warrant  changing  them. 

In  general,  the  milling  ores  of  the  district  may  be  described  as  follows : 

Assay  value $13 . 00 

Loss  in  milling 1 . 60 

Yield 11.40 

Costs  mining  and  milling 7 . 00 

Profit 4.40 

Percentage  of  profit 34.00 

Smelting  ores  produced  by  the  Esperanza  in  1906  were: 

Value  per  ton $74.50 

Freight  treatment  and  deductions $18. 75 

Cost  of  mining  per  ton 5 . 00 

Total  cost ".  .  23 .  75 

Profit 50 .  75 

Percentage  of  profit 68 . 00 


QUARTZ-PYRITE  GOLD  MINES 


469 


The  external  conditions  are  probably  about  average  for  gold  mining. 
The  wages  for  natives  are  low  and  their  labor  inefficient.  Water- 
generated  electric  power  is  furnished  to  the  mine.  The  El  Oro  company 
owns  a  railroad,  timber  land,  and  a  sawmill,  and  presumably  supplies 
the  other  mines  as  well  as  its  own  with  timber  and  transportation. 

The  walls  are  heavy,  and  where  broken  by  cross-faults  become  very 
soft.  Ordinarily  the  square-set  rooms  can  be  kept  open  to  a  height  of 
40  to  50  ft.;  then  they  must  be  filled.  The  mines  are  pretty  hot.  The 
ore  forming  in  good-sized  bodies  is  separated  into  streaks  in  different 
parts  of  the  shear  zone.  The  development  of  these  requires  considerable 
crosscutting  and  drifting  along  the  intersected  streaks.  Work  is  also 
done  on  entirely  distinct  veins  separated  by  some  hundreds  of  feet  of 
waste.  The  experience  to  date  has  shown  the  requirements  in  the  way 
of  development  to  be  as  follows: 


Feet 

Tons  mined 

Tons 
developed 

El  Oro  

88,803 

820,000 

605,000 

Esperanza 

60,640 

875,000 

142,000 

Total 

149,440 

1,695,000 

747,000 

About  one  foot  of  opening  work  to  16  tons  discovered 


El  Oro 

Esperanza 

Tons  mined                                                             .... 

1,080,788 

450,000 

Tons  milled 

1,027,282 

333,330 

Mining  ...                                                            

SI.  99 

$2.80 

Development 

0  74 

0  80 

Milling  ....                                                

0.77  1 

2.63 

Cyaniding                                                                        .  . 

> 
0.74  j 

Water  

0.02 

Other...                                                                   

0.13 

General  

0.90 

1.08 

Construction                                                 .      

0.36 

0.19 

Total  

$6.02 

$7.50 

The  recovery  of  metals  at  the  two  mines  is  reported  for  1906-7  as 
follows: 


Gold, 
per  cent. 

Silver, 
per  cent. 

Total  value, 
per  cent. 

Esperanza                                                         .  . 

90.64 

57.33 

86.20 

El  Oro  

90.28 

68.55 

86.63 

470  THE  COST  OF  MINING 

Costs  at  the  Esperanza  have  always  been  higher  than  at  the  El  Oro 
both  for  mining  and  milling.  There  is  nothing  in  the  reports  to  explain 
why  this  should  be  so. 

KOLAR  DISTRICT,  MYSORE,  INDIA 

In  Vol.  XXXIII,  Part  1,  of  the  "  Memoirs  of  the  Geological  Survey 
of  India,"  F.  H.  Hatch  gives  an  excellent  practical  description  of  the 
Kolar  mines  as  they  were  in  1900.  Since  that  time  certain  changes  have 
been  introduced,  notably  water-generated  electric  power;  the  scale  of 
operating  has  increased,  and  the  costs  diminished,  but  no  specific  descrip- 
tion of  these  changes  has  come  to  my  attention.  The  reports  of  the 
various  companies  give  abundant  information  about  output,  costs,  mine 
developments  etc.  It  is  possible  that  something  might  be  changed  by 
Mr.  Hatch  if  the  descriptions  were  be  to  brought  down  to  the  present 
day,  but  on  the  whole  the  sources  of  information  are  satisfactory.  One 
feels  particularly  like  complimenting  Messrs.  John  Taylor  &  Sons,  who 
manage  most  of  the  mines,  on  their  complete  and  detailed  annual  reports 
to  their  stockholders. 

The  principal  mines  are  the  Mysore,  Champion  Reef,  Ooregum,  and 
Nundydroog:  other  mines  are  not  very  profitable.  The  district  has 
been  opened  since  1882.  The  output  has  been  steadily  increasing,  but 
the  maximum  seems  to  have  been  reached.  The  climate  is  tropical;  the 
rainfall  averages  30.13  in.  per  year,  but  is  variable. 

This  Indian  gold-field  is  one  of  the  most  instructive  examples  to  be 
found  anywhere  in  studying  the  basic  principles  of  mine  economics. 
The  center  of  the  field  is  183  miles  from  the  important  seaport  of  Mad- 
ras; the  freight  rate  for  various  articles  being  as  follows  (presumably  per 
long  ton) : 

Coal  in  carloads $1 . 40 

Timber  less  than  17  ft.  long 1 . 90 

Timber  more  than  17  ft.  long 2 . 24 

Steel,  cast  iron  pipes,  machinery,  and  kerosene 3 . 40 

Wire  ropes  and  galvanized  iron  pipes 4 .45 

Machinery  in  small  lots 5 . 87 

Explosives 16. 67 

Indian  coal  is  delivered  at  the  mines  for  $6.50  per  ton;  English  coal 
for  $9.75,  and  fire  wood  for  $2.56.  Ordinary  mining  timber  costs  from 
$20  to  $45  per  M.,  a  large  proportion  being  of  the  more  expensive  kinds. 
Dynamite  costs  about  27  cents  per  pound  and  blasting  gelatin  (93  per 
cent,  nitroglycerin)  35  cents.  These  supplies,  it  will  be  observed,  are 
all  more  expensive  than  in  the  United  States  in  the  proportion  of  perhaps 
two  to  one. 

Labor  at  Mysore. — When  we  come  to  labor  the  situation  is  interest- 
ing. Men  are  employed  in  the  following  proportions : 


QUARTZ-PYRITE  GOLD  MINES  471 

Europeans 2 . 2  per  cent. 

Eurasians , 1.6  per  cent. 

Natives 96 . 2  per  cent. 

I  have  no  means  of  computing,  except  approximately,  the  average 
wages  earned  by  three  classes.  Europeans  are  paid  by  the  month,  on 
contract  usually  for  three  years.  Transportation  is  provided  by  the 
companies  to  and  from  Europe,  and  quarters,  furniture,  fuel,  lights,  and 
servants  also.  Men  laid  up  by  sickness  draw  full  pay.  The  salaries 
vary  from  $30  a  month  for  some  of  the  miners  to  $100  for  smiths  and 
machinists,  and  $250  to  the  highest  paid  chemists  and  foremen.  Con- 
sidering the  debilitating  effect  of  the  climate  and  the  loss  of  time  during 
illness,  voyages,  and  holidays,  it  does  not  seem  improbable  that  the 
work  done  by  these  men  costs  at  least  twice  as  much  as  work  done  in 
the  United  States  would  cost  if  done  by  men  paid  the  same  wages. 
Indeed  I  believe  this  estimate  is  too  low. 

Wages  of  natives  are  as  follows  in  cents  per  day. 

Carpenters 12  to  50 

Smiths 8  to  48 

Timbermen 16  to  43 

Engine  drivers 20  to  33 

Trackmen. 20  to  41 

Gang  bosses 24  to  33 

Machine  men 20  to  33 

Hand  miners 16  to  24 

Blasters 16  to  24 

Landers 16  to  20 

Trammers 16  to  18 

Muckers 14  to  16 

Firemen 12  to  16 

Surface  coolies 8  to  12 

It  is,  of  course,  impossible  to  obtain  from  these  details  an  exact  esti- 
mate of  the  wages  paid,  but  on  the  assumption  that  the  wages  of  miners 
are  somewhere  near  the  average  for  natives  and  that  Europeans  average 
$5  a  day  including  expenses,  and  Eurasians  $2,  we  have: 

2 . 2  Europeans  at  $5  equals $1 1 . 00 

1 . 6  Eurasians  at  $2  equals 3 . 20 

96.2  Natives  at  $0.23  equals 22.12 


100.0  $36.32 

This  means  an  average  wage  of  36  cents  or  thereabouts,  for  all 
employees. 

Factors  in  Mining. — The  internal  factors  are  a  single  marvelously 
persistent  quartz  vein,  with  a  few  branches,  developed  for  a  length  of 


472  THE  COST  OF  MINING 

17,500  ft.  The  vein  occurs  in  a  belt  of  schists  which  I  suppose,  from 
the  presence  of  beds  of  quartzite,  are  undoubtedly  in  part  metamor- 
phosed sediments.  The  belt  seems  to  be  a  syncline,  but  it  is  invaded 
on  both  sides  by  intrusive  granites.  The  bulk  of  the  schist  consists  of 
altered  traps  or  lavas.  There  are  some  later  dikes  of  a  basic  character. 
The  vein  corresponds  both  in  strike  and  dip,  which  is  about  50  to  55 
degrees  west,  with  the  foliation  of  the  schists.  The  ore  is  a  clean  quartz 
containing  0.25  per  cent,  of  pyrite.  The  quartz  occurs  in  a  number  of 
shoots  along  the  vein.  Some  of  the  shoots  occur  in  sharp  anticlinal  folds 
where  something  like  the  saddle  reefs  of  Bendigo,  Australia,  has  been 
developed  in  the  vein.  The  direction  of  other  ore  shoots  along  the  plane 
of  the  vein  seems  to  be  about  parallel  to  the  axes  of  these  folds.  The 
extent  of  the  shoots  is  variable;  some  of  the  largest  are  known  to  be 
more  than  4000  ft.  deep  along  the  slope,  and  as  much  as  800  ft.  wide, 
measured  at  right  angles  to  the  long  axis.  It  is  difficult  to  ascertain 
the  thickness  of  the  vein  stoped;  the  average  is  probably  between  3  and 
4  ft.  Taking  the  vein  at  large,  the  poor  with  the  good,  the  average 
thickness  of  mill  ore  developed  on  the  Mysore  property  in  1907  was 
1.8  ft. 

Although  these  mines,  particularly  the  Mysore,  are  looking  exceed- 
ingly well  in  the  bottom,  the  thickness  and  grade  of  the  ore  show  some 
diminution.  The  greatest  vertical  depth  reached  is  about  2400  ft.  in 
the  Edgar  shaft  of  the  Mysore.  In  earlier  years,  when  the  mines  were 
less  than  1000  ft.  deep  vertically,  the  ore  shoots  on  the  Mysore  and 
Champion  Reef  mines  seem  to  have  averaged  nearly  5  ft.  in  thickness. 

Method  of  Treatment. — The  milling  practice  is  simple.  The  ore, 
when  properly  sorted,  yields  a  clean  quartz  with  very  little  clayey  mat- 
ter in  it.  The  process  consists  of  amalgamation  in  a  stamp  battery 
followed  by  cyaniding  the  tailings.  A  special  cyanide  process  is  used 
for  the  comparatively  small  proportion  of  slimes.  The  only  distinctive 
fact  is  that  the  crushing  duty  per  stamp  is  low,  being  only  2.25  tons  per 
day  per  1050-lb.  stamp.  The  pulp  is  put  through  screens  averaging 
about  1600  apertures  per  square  inch.  The  low  stamp  duty  is  made 
necessary  by  the  high  grade  of  the  ore.  In  the  Transvaal  and  at  the 
Treadwell  the  duty  per  day  is  about  five  tons  per  stamp. 

A  few  years  ago  a  striking  and  uneconomical  feature  of  the  metal- 
lurgical practice  was  that  the  work  was  done  in  a  number  of  small  mills 
instead  of  in  a  large  central  one  on  each  property.  This  bad  feature 
has  been,  I  believe,  largely  corrected. 

It  will  be  seen  from  the  following  table  that  the  conditions  and  costs 
are  fairly  uniform  for  the  four  properties.  Consequently  it  does  not 
seem  worth  while  to  give  details  for  more  than  one. 

For  this  purpose  the  Mysore  mine  serves  excellently.  It  is  an  ex- 
traordinarily good  and  profitable  property,  situated  at  the  south  end 


QU ART Z-PY RITE  GOLD  MINES 


473 


OUTPUT  AND  VALUATION  OF  ORE  PRODUCED  BY  THE  FOUR  PRINCIPAL  MINES  OF 
THE  KOLAR  DISTRICT  OF  INDIA  REDUCED  TO  SHORT  TONS  AND  AMERICAN 
CURRENCY. 


Name  and 
date 


Tons 
mined 


Tons  ore 
in  sight 


Yield  from 
ore  mined 


Average 
per  ton 


Dividends 


Average 
divi- 
dends 
per  ton 


Cost 
per 
ton 


Mysore 

1884-1898 

Champion 
Reef 

1892-1908 

Nundyroog 

1888-1908 

Ooregum 

1888-1908 

Four  mines 

1S84-1908... 


2,454,562 

2,130,748 
1,029,700 
1,660,781 
7,305,791 


1,085,000 

133,000 
172,000 


$52,624,000 

40,340,000 
17,736,000 
23,580,000 


1,388,000   !   $134,300,000 


$21.18 

19.00 
17.24 
14.20 
18.40 


$27,252,000    $10.96 


17,148,000 
7,163,000 
7,852.000 

59,655,000 


8.05 


4.74 

8.18 


$9.22 

10.95 

10.28 

9.46 

10.22 


NOTE. — There  is  reason  to  believe  that  the  dividends  are  larger  than  the  real  profits  because  they 
include  sums  obrained  from  stockholders,  for  premiums  and  new  stock  issued  to  cover  new  construction 
and  developments.  This  practice,  however,  has  now  been  stopped  and  it  may  that  the  costs  estimated 
are  not  far  from  the  truth,  on  the  theory  that  the  money  heretofore  spent  on  plant  will  serve  for  the 
future  operation  of  the  mines,  or  at  least  for  the  ore  in  sight. 

of  the  district  and  covering  7700  ft.  along  the  lode.  It  is  developed  to 
an  extreme  vertical  depth  of  2600  ft.,  equal  to  4000  ft.  along  the  incline. 
The  ore  is  derived  from  three  independent  shoots  of  which  the  central 
one  is  the  more  prominent,  but  all  three  have  proved  persistent  to  the 
lowest  workings.  In  1907  the  record  was  as  follows,  expressed  in  short 
tons  and  American  currency: 

Tons  mined  and  treated 233,825 

Assay  value  of  ore $20 . 00 

Yield  of  ore 17. 12 

Loss  in  milling 2 . 88 

Extraction  in  mill 85 . 51  per  cent. 

Costs 
per  ton 

Plant  and  equipment,  including  a  proportion  of  the 

work,  average  for  eleven  years $1 . 87 

Administration 0 . 20 

Mining 4 . 68 

Milling 0.63 

Cyaniding  tailings 0 . 23 

Repairs  to  buildings,  machinery,  and  plant 0.90 

Surface  costs 0 . 10 

Pumping  charges 0 . 05 

Transport  and  insurance  of  gold 0.15 

Kolar  Central  Metallurgical  Establishment 0.01 

Medical  Establishment 0 . 04 

Survey  department 0.01 


474  THE  COST  OF  MINING 

Police  and  detective  force 

Traveling  expenses  of  employees ...  0 . 04 

Kolar  Gold  Field  Electricity  Department 0.01 

Telegrams,  postages,  and  incidental  expenses  in  India  0.02 

Directors'  fees 0.11 

Salaries  and  bonuses  to  managers  and  clerks 0. 15 

Telegrams,  postage,  stationery,  etc 0 . 03 

Total  costs  equalizing  small  differences  in  details 9.25 

Net  profit  per  ton 7 . 87 

Profit  on  gross  value  of  ore  mined 39  per  cent. 

Total  costs  and  losses 12 . 13 

A  Question  of  Bookkeeping. — To  charge  improvements  to  capital 
account,  even  if  they  are  absolutely  new,  is  a  bookkeeping  error  into 
which  nearly  all  mining  companies  fall.  This  error  is,  of  course,  in  most 
cases  theoretically  rectified  by  writing  off  a  certain  amount  of  deprecia- 
tion. While  in  the  case  of  these  Kolar  mines  it  appears  that  the  deprecia- 
tion has  kept  pace  with  the  increase  of  capital  (for  eleven  years  the 
Mysore  company  received  from  stockholders  about  £60,000  a  year),  this 
does  not  alter  the  fact  that  the  money  thus  written  off  did  not  come  out 
of  the  mine.  To  some  extent,  of  course,  the  money  thus  provided  was 
used  to  make  a  real  increase  in  the  company's  resources,  and  to  this  extent 
it  will  be  paid  back  in  the  shape  of  increased  profits,  or  lower  costs,  in 
later  years.  But  it  should  never  be  forgotten  for  a  moment  that  there 
is  always  some  work  going  on  about  a  mine  in  the  shape  of  permanent 
improvements,  and  that  for  a  period  of  years  the  average  amount  thus 
expended  should  not  be  written  off  the  balance  sheet;  it  should  be  charged 
to  operating.  To  pay  operating  expenses  out  of  new  capital  is  either  a 
fraud  or  a  bookkeeping  sophistry.  It  is  always  a  mistake  more  or  less 
complete.  It  may  be  partly  justified  but  never  wholly. 

The  accompanying  table  prepared  by  Mr.  Hatch  shows  the  distribu- 
tion of  costs  for  the  year  1899.  These  costs  are  a  little  higher  than  the 
average,  but  not  so  much  as  to  give  a  seriously  false  impression. 

Within  the  past  year  or  two  considerable  economy  has  been  effected 
by  the  introduction  of  water-generated  electric  power  from  the  Cauvery 
falls.  In  1899  steam  power  cost  $150  per  horse-power  year  and  the  cost 
per  ton  for  the  power  used  was  more  than  $3.  Electric  power  is  now 
furnished  for  $90  a  year,  reducing  the  power  cost  more  than  $1  per  ton. 

I  will  not  go  into  details  regarding  all  the  mines,  but  will  give  some 
further  facts  regarding  the  Mysore,  the  largest  and  best  mine  in  the 
district.  This  property  in  the  years  1902-1907,  inclusive,  did  163,691 
ft.  of  development  work,  mined  and  milled  1,210,000  tons  of  ore,  and 
increased  its  reserves  from  380,800  tons  to  1,012,480  tons.  The  actual 
ore  developed  during  the  period  was  1,841,500  tons,  being  a  trifle  more 
than  11  tons  per  foot  of  development  work.  This  development  with 
approximate  costs  was  made  up  as  follows : 


QUARTZ-PYRITE  GOLD  MINES 


475 


Drifts  and  crosscuts,  117,912  ft.  $10  equals. . . 

Raises,  24,041  ft.  at  $40  equals 

Winzes,  12,291  ft.  at  $40  equals 

Shafts,  9,447  ft.  at  $100  equals 


$1,179,120 

960,000 

490,000 

944,700 

Total $3,574,000 

The  costs  are  approximations  from  Hatch's  report. 

COST  AT  THE  MINES  OF  MYSORE  IN  1899,  ACCORDING  TO  HATCH 


Mysore 

Champion 
reef 

Ooregum 

Nundy- 
droog 

Balaghat 

Coro- 
mandel 

Mine  costs  

$5.79 

$7  15 

$7   02 

$12  12 

«4  «7 

Mill  

1  28 

1  68 

1  41 

1  41 

1    60 

Wheeler  pans 

0  69 

$9   46 

0  21 

Cyanide  

0  69 

0  89 

0  75 

0  50 

0  47 

Administration  
General  charges  

0.28 
0  75 

0.27 
0  61 

0.44 
0  49 

0.51 
0  48 

0.79 
0  31 

0.76 
0  49 

Total  

$8  79 

$11  29 

$10  39 

$10  38 

$15  13 

$8  19 

Royalty  on  gold  ore 

1  58 

1  51 

0  86 

1  12 

0  63 

0  21 

Depreciation   

0  41 

0  26 

0  14 

0  40 

2  20 

0  50 

London  office 

0  39 

0  30 

0  33 

0  65 

0  88 

0  74 

Grand  total  
Reduced  to  short  tons  .  .  . 

$11.17 
$10.00 

$13.36 
$11.93 

$11.72 
$10.47 

$12.55 
$11.21 

$18.84 
$16.82 

$9.64 

$8.61 

High  Development  Cost. — If  these  costs  are  anywhere  near  the  actual, 
and  I  believe  that  they  are,  we  have  an  average  cost  per  ton  developed 
of  about  $1.94  and  per  ton  milled  of  $2.95. 

In  the  abstract  of  Hatch's  figures  for  various  kinds  of  work  it  is  to  be 
observed  that  the  development  accounts  for  about  half  the  cost  of  mining. 
In  this  connection,  however,  it  is  well  to  point  out  that  a  considerable 
portion  of  the  development  work  does  not  appear  in  the  working  costs, 
but  is  charged  to  capital  account.  The  only  place  where  this  expenditure 
appears  is  in  the  balance  sheet  where  certain  sums  are  " written  off" 
for  depreciation,  etc.  These  sums  amount  in  six  years  to  $2,122,000  on 
machinery,  plant,  etc.  Of  this  a  good  deal  must  represent  the  cost  and 
equipment  of  Edgar's  and  other  shafts. 

To  show  how  this  bookkeeping  works,  let  us  take  the  revenue  account 
for  the  year  1907.  Here  we  find  that  administration  and  working  costs, 
including  directors'  fees,  insurance,  and  all  general  expenses,  amount  to 
$8  per  ton.  To  this  we  must  add  from  the  balance  sheet,  in  order  to  get 
the  management's  real  estimate  of  the  costs,  the  sum  of  $1.76  per  ton  for 
depreciation,  this  being  the  average  for  the  last  six  years.  With  this 
addition  the  total  cost  is  $9.76.  This,  it  will  be  observed,  is  very  close, 
both  to  Mr.  Hatch's  figures  in  1899,  and  to  my  own  estimate  based  on  the 
output  and  dividends. 

Mr.  Hatch  comments  as  follows : 


476  THE  COST  OF  MINING 

"The  working  costs  are  high,  but  there  is  not  much  difficulty  in  accounting 
for  this.  First,  the  nature  of  the  ore  deposit  dictates  a  high  cost  of  working,  as, 
for  instance,  the  occurrence  of  the  pay-ore  in  shoots,  which,  though  of  high  grade, 
are  of  comparatively  limited  extent.  This  leads  to  a  heavy  expenditure  in  de- 
velopment, as  much  sinking,  driving,  and  crosscutting  must  be  done  in  waste  rock 
in  order  to  open  up  pay  or  shoot  ore.  The  cost  of  this  development  work  is  in- 
cluded in  the  figures  given  for  working  costs.  Then  again  the  heaviness  or 
instability  of  the  ground  in  parts  of  the  mines  necessitates  a  big  expenditure  on 
timber  to  secure  the  stopes,  shafts,  and  levels. 

Cost  and  Grade  of  Ore. — "  Further,  it  must  not  be  forgotten  that  the  cost  of 
working  a  high-grade  ore  is  of  necessity  greater  than  that  of  a  low-grade  ore,  and 
the  reason  for  this  is  plain.  In  mining  low-grade  stuff  the  main  object  is  to  ob- 
tain a  large  tonnage  at  a  low  cost;  consequently  the  stopes  are  carried  as  wide  as 
possible  and  the  whole  mass  of  the  orebody  is,  as  a  rule,  exploited,  the  exploratory 
or  dead  work  being  at  a  minimum.  With  high-grade  stuff,  on  the  other  hand,  the 
stopes  are  kept  as  narrow  as  possible,  and  great  care  is  exercised  only  to  extract 
the  payable  portions  of  the  ore-body.  Much  exploratory  work  in  waste  rock  is, 
therefore,  necessary  in  order  to  locate  the  pay  ore.  Similar  factors  influence  the 
metallurgical  treatment.  With  low-grade  stuff  the  ore  is  passed  quickly  through 
the  mill,  a  high  stamp  duty  being  maintained  by  the  use  of  coarse  screening  and  a 
low  discharge,  and  the  cyanide  process  is  relied  upon  to  catch  the  gold  that  es- 
capes amalgamation.  Whereas  with  high-grade  ore  the  usual  practice  is  to  crush 
fine,  and  to  catch  as  high  a  percentage  of  the  gold  as  possible  by  amalgamation. 

"For  these  reasons  it  is  impossible  to  compare  the  working  costs  of  high-grade 
mines,  such  as  those  at  Kolar,  with  the  low-grade  mines  of  other  countries,  as,  for 
instance,  those  of  the  Witwatersrand  in  the  Transvaal.  At  the  same  time,  it 
must  be  admitted  that  a  reduction  in  working  expenses  at  Kolar  could  no  doubt 
be  effected  by  improvements  in  milling  plant,  and  by  the  substitution  of  auto- 
matic mechanical  means  for  native  labor  in  the  handling  of  the  ore  delivered  at 
the  shaft  top,  and  of  the  tailings  leaving  the  mill.  The  substitution  of  a  large 
centrally-placed  mill  with  heavy  stamps  for  several  small  and  scattered  mills  with 
light  stamps,  which  at  the  present  moment  is  being  carried  out  on  the  Champion 
Reef,  and  is  in  anticipation  at  Ooregum,  will  decrease  the  cost  of  milling  at  these 
mines.  The  introduction  of  mechanical  haulage,  automatic  sorting  tables,  tail- 
ings, wheels  for  elevating  the  tailings,  and  pointed  boxes  for  classifying  and  filling 
directly  into  the  cyanide  vats,  all  these  improvements  would  no  doubt  have  a 
similar  effect.  So  also  will  the  introduction  of  water  power  transmitted  by  elec- 
tric current,  as  it  is  proposed  to  do  by  the  Cauvery  power  scheme." 

DETAILS  OF  DEVELOPMENT  COSTS,  HATCH 
COST  OF  RAISING  (10  X  5  FT.)  15.6  FT.  PER  MONTH 

Labor,  white $8.25 

Labor,  native 4 . 50 

Explosives 6  25 

Supplies 4.90 

Compressed  air 21 . 00 

$44.90 


QUARTZ-PYRITE  GOLD  MINES 
COST  OF  DRIVING 


477 


Hand $9  per  ft.,  rate  15  ft.  per  month. 

Machine $11  per  ft.,  rate  30  to  35  ft.  per 

month. 
Stoping  in  4H-ft.  vein  without  timbering  costs  about  $1.25  per  ton. 

COST  PER  FOOT  OF  SHAFT-SINKING  IN  KOLAR  GOLDFIELDS 


Nundydroog 
12  X  6  ft. 

Oakleys' 
16  X  8  ft. 

Champion 
Reef 
16  X  8  ft. 

Edgar's 
Mysore 
circ'r  18  ft. 

Labor  .... 

$31  27 

$32  68 

Timber  

7  88 

25  22 

Explosives  and  supplies  

13  40 

24  20 

Compressed  air  
Hoisting 

32.84 
10  93 

33.88 
4  84 

Drill  sharpening  

0  49 

Speed  per  month 

$96.81 
15  ft 

$120.82 
25  ft 

$145.91 

28  ft 

$120 
20  ft 

Equivalent  work  in  the  United  States  may  be  estimated  as  follows: 

Sinking  large  working  shafts  (Lake  Superior,  Butte,  Coeur  d'Alene,  or  Cripple 

Creek),  average  rate  per  month  50  ft.,  cost  per  ft $100 

Raising  with  complete  timbering,  10  X  6  ft 25 

Drifting  in  average  ground,  5  X  8  ft 9 

Wages  and  Cost  of  Labor. — I  have  given  many  details  about  the 
Kolar  mines  because  I  wish  to  illustrate  the  extraordinary  lack  of  corre- 
spondence between  the  wages  paid  and  the  costs.  There  does  not  seem  to 
be  any  detail  in  which  work  at  these  mines  is  done  cheaper  than  in  the 
United  States.  In  Cripple  Creek,  or  Butte,  or  the  Coeur  d'Alene,  where 
wages  average  ten  times  as  high  as  at  Kolar,  work  can  be  done  just  as 
cheaply.  This  is  true  of  drifting,  of  crosscutting,  of  raising,  of  shaft 
sinking,  of  stoping,  of  everything  on  which  I  can  find  data  for  comparison. 

It  is  true  that  supplies  cost  more  than  in  the  United  States;  neverthe- 
less out  of  working  costs  of  $8.96  per  ton  I  find  that  labor  must  account 
for  about  $5.50  or  60  per  cent.  This  is  the  usual  proportion  in  the 
United  States.  We  find  that  the  number  of  men  employed  to  mine  and 
mill  217,770  tons  of  rock  in  1907  at  the  Mysore  mine  was  8334  or  26  tons 
per  man  per  year.  At  the  Camp  Bird  mine  in  Colorado,  where  external 
conditions  are  unfavorable,  the  ore  being  of  higher  grade  and  the  costs 
nearly  the  same,  the  wages  are  ten  times  as  high  and  the  output  per  man 
ten  times  as  great. 

It  is  inconceivable  to  me  that  the  energy  expended  by  a  miner  in 
Colorado  is  ten  times  as  great  as  that  expended  by  the  Indian  miner. 
The  true  explanation  of  the  wonderful  difference  in  performance  lies  in 


478  THE  COST  OF  MINING 

the  industrial  efficiency  of  the  community  by  which  the  men  are  sur- 
rounded. 

THE  RAND 

Witwatersrand. — The  great  gold-mining  field,  Witwatersrand,  pro- 
duces one-third  of  the  world's  annual  yield  of  gold,  and  is  so  well  known 
to  the  mining  public,  and  even  to  the  public  at  large,  that  any  general 
description  of  it,  other  than  such  as  will  serve  my  purpose  of  illustrating 
the  factors  governing  the  cost  of  mining,  is  unnecessary. 

The  occurrence  of  the  ores  here  bears  a  resemblance  to  that  of  two 
important  districts  described  elsewhere,  i.e.,  to  the  copper  conglomerates 
of  Lake  Superior  and  to  the  Kolar  mines  in  India.  Like  the  Calumet 
conglomerate  the  banket  beds  of  the  Transvaal  are  mineralized  sedimen- 
tary beds,  and  the  value  of  the  material  worked  is  not  far  from  equivalent, 
but  the  "Rand"  beds  are  thinner,  more  persistent,  and  workable  over 
much  greater  areas.  The  Kolar  mines,  while  on  a  vein  of  different  geo- 
logical origin  and  producing  ores  of  much  higher  value,  bear  a  considerable 
resemblance  in  the  persistence  and  abundance  of  the  mineralization. 

Two  recent  papers  by  distinguished  American  engineers  throw 
excellent  light  on  the  present  condition  of  the  industry.  Ross  E.  Browne 
has  written  an  exhaustive  discussion  of  "  Working  Costs  of  the  Mines 
of  the  Witwatersrand"  (republished  in  the  Mining  Journal  of  London, 
in  the  issues  of  July,  1907)  and  Thomas  H.  Leggett  (Trans.  A.  I.  M.  E., 
February,  1908),  describes  the  " Present  Mining  Conditions  on  the  Rand." 

Mr.  Browne  sizes  up  average  conditions  for  the  whole  district  as 
follows :  ^ 

Per  ton 
milled 

Working  cost $5 . 85 

Capital  redemption 1 . 22 


Total  expense .     $7.07 

Yield 8.71 

Profit 1 . 64 

By  capital  redemption,  I  suppose,  Mr.  Browne  means  all  capital, 
including  probably  large  sums  paid  for  mining  claims.  By  the  theory  of 
costs  used  in  this  article  such  sums  are  profits  paid  to  somebody  by  the 
working  of  ore  from  the  land  and  are  not,  therefore,  costs.  Accordingly, 
Mr.  Browne's  estimate  of  the  cost  of  capital  redemption  is  somewhat  high. 

A  summary  of  the  record  of  the  Witwatersrand  is  as  follows : 

Tons  milled  (1884-1908) 113,600,000 

Value  recovered $1,049,000,000.00 

Dividends  paid 273,655,000.00 

Yield  per  ton $9 . 23 

Dividends  per  ton 2.41 

Cost  per  ton 6 . 82 


QUARTZ-PYRITE  GOLD  MINES  479 

In  1908  the  figures  were  as  follows: 

Tons  milled 18,000,000 

Value  recovered $144,600,000 . 00 

Dividends  paid 41,800,000.00 

Yield  per  ton 8 . 03 

Dividends  per  ton 2 . 30 

Cost  per  ton 5 . 73 

It  is  probable  that  the  dividends  in  these  tables  include  sums  that 
should  properly  be  charged  to  redemption  of  capital,  i.e.,  amortization 
of  plants,  and  that  the  costs  should  be  estimated  a  little  higher.  'On 
the  other  hand,  it  is  certain  that  these  costs  include  all  current  construc- 
tion, or  depreciation  charges,  and  are  a  much  better  exhibit  of  the  real 
dividend  costs  than  the  " working  costs"  ordinarily  published.  Almost 
all  the  production  comes  from  dividend-paying  mines. 

On  nine  representative  mines  in  the  district  Mr.  Browne  finds  the 
following  average  working  conditions: 

Number  of  stamps  operating Ill 

Working  costs  per  ton  milled $5.19 

Percentage  rejected  by  sorting  (probably  at  surface  only)    ....  13 

Ratio  of  tons  developed  to  tons  mined 0 . 90 

Width  (thickness)  of  stopes  in  inches 69 

Continuity  of  reefs,  normal  for  the  Rand,  unrivaled  elsewhere. 

Average  depth  of  mining  in  feet 1200 

Dip  of  reef 30  degrees 

Hardness  of  ground,  solid  quartzite  and  slate. 

Cost  of  timber  per  ton  of  ore  mined 4  cents 

Cost  of  coal  per  ton  delivered  at  plant $3.41 

Gallons  of  water  pumped  from  mine  per  ton  of  ore  milled 313 

Duty  of  stamp,  tons  milled  per  24  hours 4 . 85 

With  the  above  average  conditions  the  average  costs  are  as  follows: 

Development  cost  per  ton $0 . 37 

Other  mining  costs 2 . 63 

Total  cost  per  ton  hoisted $3 . 00 

Milling,  crushing,  and  amalgamating 0 . 69 

Cyaniding 0 . 64 

General  expense  at  mines 0. 25 

General  expense  at  head  office 0. 18 

Total $4.76 

These  figures  represent  the  costs  as  they  would  be  if  all  the  ore  hoisted 
were  milled,  but  as  13  per  cent,  is  rejected  by  sorting,  the  cost  as  divided 
by  the  tonnage  actually  milled  is  brought  up  to  $5.19. 

A  Comparison  of  Records. — I  cannot  believe  that  these  figures  make  a 
disadvantageous  comparison  with  costs  of  similar  operations  elsewhere. 


480  THE  COST  OF  MINING 

This  opinion  is  somewhat  at  variance  with  the  general  idea  among  min- 
ing men,  and,  as  I  have  never  been  in  South  Africa,  it  is  perhaps  well  to 
explain  that  I  am  going  wholly  upon  the  consideration  of  the  basic 
principles  involved. 

Mr.  Browne  sees  hope  of  reducing  costs  to  about  $3.75  per  ton  by 
increasing  the  efficiency  of  white  labor,  by  better  direction  of  colored 
labor,  and  by  reducing  the  cost  of  supplies.  With  this  hope  I  certainly 
have  no  quarrel  and  it  is  probably  not  altogether  extravagant.  Con- 
siderable improvements  are  brought  about  by  necessity  and  by  long- 
continued  effort.  As  the  grade  of  ore  diminishes  the  cost  is  inevitably 
diminished  by  the  simple  process,  among  other  things,  of  refusing  to 
work  ores  that  present  difficulties  beyond  a  certain  limit.  But  as  a 
matter  of  practical  experience,  taking  into  consideration  all  the  ins  and 
outs,  good  luck,  and  bad  accidents,  it  seems  to  me  that  the  performance 
of  the  Rand  mines  is  fully  as  good  as  that  of  other  mines. 

To  judge  better  of  this  let  us  look  up  the  life  history  of  the  greatest 
of  the  Transvaal  mines,  the  Robinson,  and  see  how  it  compares  with  other 
great  mines  of  which  we  have  the  records. 

ROBINSON  GOLD  MINING  COMPANY,  TO  END  OF  1906 

Tons  milled 2,657,768 

Total  value,  $46,535,000 Per  ton,  $17 . 50 

Working  cost  per  ton 6.36 

Construction  and  improvements 0.   8 

Total  cost  per  ton  milled 7.14 

Profit  $27,680,000 Per  ton  10.36 

Dividends  and  cash  in  profit  loss 24,219,000 

Real  estate,  securities,  and  cash  on  hand. 3,461,000 

Nearly  60  per  cent,  of  the  entire  gross  revenues  is  shown  as  clear 
profit.  Few  mines  of  this  grade  can  equal  this  showing  of  costs. 

It  would  be  an  exceedingly  laborious  compilation  to  get  the  average 
costs  in  detail,  so  I  shall  content  myself  with  giving  the  details  in  a  year  of 
which  the  costs  approximate  the  average.  Such  a  year  is  1897  when  the 
total  cost  was  $6.09  divided  between  working  cost  at  $6.65  and  construc- 
tion at  $0.25.  In  this  year  the  tonnage  hoisted  was  203,597  of  which 
23,197  was  sorted  out  on  the  surface.  In  addition  the  amount  sorted 
out  underground  was  estimated  at  60,000  tons,  making  the  total  stoped 
about  263,500  tons.  Since  the  sorting  out  of  this  waste  underground 
serves  no  useful  purpose  in  protecting  the  safety  of  the  workings,  it  was 
sorted  out  entirely  to  avoid  the  expense  of  milling.  It  is  probable  that 
the  sorting  on  the  surface  and  stowing  of  waste  underground  cost  fully 
as  much  as  the  tramming  of  ore  for  the  mill.  For  comparing  the  work 
done  here  with  certain  other  mines  it  is  necessary  to  make  these  correction. 

These  figures  are  as  low  as  those  of  the  Portland  mine  at  Cripple 
Creek,  figured  on  the  same  basis;  they  are  not  far  above  those  of  the 


Tons 


QUARTZ-PYRITE  GOLD  MINES 
MINING  COSTS,  ROBINSON  GOLD  MINING  COMPANY 


481 


263,500  sloped $443,694 

263,500  trammed 21,882 

203,597  hoisted 19,671 

263,500  mine  maintenance  and  pumping 47,306 

320,000  developed 178,334 


Per  ton 

$1.68 
1.08 
0.10 
0.18 
0.56 

$2.60 


Tamarack,  or  the  Calumet  &  Hecla,  where  the  volume  of  material  in  the 
same  area  is  more  than  double,  and  lower  than  equivalent  work  in  the 
Mysore  mine.  It  is  to  be  remembered  that  the  mining  is  done  at  the 
Robinson  on  two  beds,  the  Main  Reef  Leader  of  a  payable  width  of  18 
in.  and  the  South  Reef  of  a  payable  width  of  42  in.,  on  which  there  is  not 
room  for  working.  The  effort  is  to  carry  the  stopes  as  narrow  as  possible. 

MILLING  COSTS 


Tons 

Total 

Per  ton 

Crushing  and 

sorting.  .  . 

203  597 

$18  134 

$0  09 

Transport  to 

mill  

180,400 

5,465 

0.03 

Milling  and  n 

laintenance  .  .    . 

78  548 

0  43 

Power 

40094 

0  22 

$0.77 

SECONDARY  TREATMENT 

Vanning,  concentration 14,966. 

Cyaniding,  chlorination 126,470. 


$0.07 
0.70 

$0.77 


Total  treatment $1 . 54 

Here  we  have  ore  worth  $20  a  ton  treated  with  an  extraction  of  89.3 
per  cent,  at  a  cost  that  seems  low  enough.  A  certain  correspondence 
obtains  here  as  elsewhere  between  the  value  of  ore  treated  and  the  cost  of 
treatment,  even  by  the  same  process. 

ROBINSON,  GENERAL  EXPENSE,  263,500  TONS 


Total 

Per  ton 

General  maintenance  
General  charges                                                                     •    •  • 

$21,071 
73,918 

$0.08 
0   28 

IVIachinery  plant   and  buildings 

95,716 

0.36 

Special  charges                                          

23,531 

0.09 

Construction                                                                  

46,038 

0.18 

$0.99 

31 


482 


THE  COST  OF  MINING 


If  all  the  rock  broken,  therefore,  were  treated,  we  should  find  the 
following  comparison  with  the  costs  as  given: 


Per  ton  milled 
(as  given) 

Per  ton  mined 

Mining 

$3  90 

$2   60 

Treatment  

1  57 

1  54 

General  expense     .           ... 

1  18 

0  81 

Construction  

0  25 

0  18 

$6.90 

$5.13 

The  gradual  diminution  both  of  costs  and  the  grade  of  ore  is  shown  as 
follows : 


Yield  per  ton 

Working  costs  per  ton 

1890 
1906 

$46  .  20 
13.84 

$10.02 
5.30 

At  the  end  of  1906,  2,180,000  tons  of  ore  were  blocked  out,  of  which 
the  development  had  been  paid  for  by  mining  operations  to  date.  The 
average  assay  value  of  the  reserves  was  $14.50  per  ton,  and  the  extraction 
being  realized  was  93  per  cent.;  so  that  a  net  yield  of  113.50  could  be  ex- 
pected. It  seems  plain  from  the  steady  reduction  of  costs  that  these 
reserves  could  be  mined  for  all  working  and  construction  costs  for  $5  a 
ton,  leaving  a  net  profit  of  $8.50  per  ton,  or  $18,500,000. 

I  feel  that  this  record  of  the  Robinson  mine  shows,  in  a  general  way, 
the  achievements  and  tendencies  of  the  Rand  industry;  and  that  it  is  a 
monument,  not  of  extravagance  and  carelessness,  but  of  excellent  engineer- 
ing and  of  broad-gaged  and  honest  management. 

With  this  view  of  the  cost  problem  on  the  Rand,  Thomas  H.  Leggett 
is  in  full  accord.  I  quote  from  his  paper  on  the  "  Present  Mining  Condi- 
tions on  the  Rand,"  as  follows: 

"As  the  mining  camp  grows  older  the  working  costs  almost  invariably  de- 
crease, providing  the  camp  maintains  a  healthful  activity  with  advancing  years, 
and  this  has  been  the  case  on  the  Witwatersrand,  the  result  being  as  follows: 

1898,  average  working  costs  of  65  companies 25s.  1 . 3d. 

1899,  average  working  costs  of  24  companies  (a) 25s.  2 .  7d. 

1906,  average  working  costs  of  58  companies 22s.  1 .  Qd. 

1907,  average  working  costs  of  56  companies  (6) 20s.  8. Od. 

a  The  Boer  war  broke  out  in  October,  hence  the  records  are  incomplete. 

b  Two  less  than  in  1906,  due  to  exhaustion  of  the  Bonanza  mine  and  incomplete 
records  from  one  other  mine. 


QUARTZ-PYRITE  GOLD  MINES  483 

"These  costs  include  mining,  development,  crushing,  and  sorting,  milling, 
cyaniding,  maintenance,  and  general  expense,  but  they  do  not  cover  depreciation 
and  amortization,  these  items  being  more  properly  dealt  with  by  the  directors  at 
the  end  of  the  year.  These  results  show  the  very  material  decrease  of  4s.  6rf. 
per  ton  since  1899,  and  are,  therefore,  approaching  now  to  the  6s.  reduction 
predicted  by  John  Hays  Hammond  in  1901,  but  it  has  taken  time  to  attain  this 
result,  as  1  then  pointed  out  it  would  do.  A  comparison  of  the  costs  in  1907  with 
those  of  1906  shows  a  decrease  of  Is.  5d.,  or  34  cents  per  ton,  due  chiefly  to  de- 
creased wages  and  increased  efficiency  of  both  white  and  colored  labor,  including 
the  Chinese  in  the  latter  category,  though  increased  crushing  capacity  through 
the  use  of  heavier  stamps  (up  to  1670  Ib.  per  stamp)  and  regrinding  in  tube  mills 
have  also  aided. 

"In  1906  fifty-eight  companies  mined  and  milled  13,065,624  tons  of  ore  at  a 
total  cost  of  £14,411,219,  while  in  1907  fifty-six  companies  milled  and  mined 
14,861,234  tons  at  a  total  cost  of  £15,35., 749,  being  an  increase  of  1,795,610  tons 
for  an  increased  cost  of  only  £940,530. 

"Most  of  these  economies  were  attained  during  the  latter  half  of  1907,  after 
the  white  miners'  strike,  and  some  mines  made  startling  reductions,  as,  for  in- 
stance, the  Robinson,  which  reported  costs  of  14s.  9d.  for  November,  and  the 
Glencairn,  of  15s.  Id.  per  ton. 

"Such  strenuous  and  successful  efforts  are  now  being  made  to  reduce  still 
more  the  working  costs  on  the  Rand,  that  I  think  it  safe  to  anticipate  another 
large  decrease  for  the  year  1908." 

Labor  Cost  not  Excessive. — I  have  expressed  the  opinion  that  costs 
on  the  Rand  are  not  essentially  different  from  those  that  would  be  ob- 
tained were  the  properties  situated  in  the  United  States.  What  about 
wages?  The  only  direct  information  I  have  is  the  statement  of  Mr. 
Browne  that  whites  average  $4. 60  a  day  and  colored  laborers  $0.66  per  ^ay, 
and  are  employed  in  the  proportionof  9.2  colored  men  to  one  white  m  . 

Average  wages  about  $1.18  per  day;  as  the  percentage  of  colored  men 
varies,  so  the  average  wages  will  vary  from  time  to  time. 

In  my  judgment  the  figures  demonstrate  that  the  Rand  is  another 
proof  of  the  fact  that  the  rate  of  wages  does  not  determine  the  cost  of 
labor.  Criticism  of  the  Rand  has  been  to  the  effect  that  costs  are  higher 
there  than  in  the  United  States.  Mr.  Browne  believes  that  California 
labor  paid  California  prices  on  the  Rand  would  be  cheaper  than  the  labor 

COSTS 

Per  Foot 

Rand,  average  for  shafts,  drifts,  raises,  etc $20 

Kolar,  average  for  shafts,  drifts,  raises,  etc 22 

Cripple  Creek,  average  for  shafts,  drifts,  raises,  etc 14 

WAGES 

Per  Day 

Rand $1.18 

Kolar : 0.36 

Cripple  Creek 3.40 


484  THE  COST  OF  MINING 

actually  employed  by  about  15  per  cent.  In  California  wages  are  approx- 
imately $3  per  day.  I  have  estimated  average  development  costs  at 
various  places  as  shown  above : 

An  exact  comparison  cannot  be  made,  because  the  rocks  and  condi- 
tions are  different.  In  the  Rand  the  rock  is  harder  than  at  Cripple 
Creek,  and  the  openings  probably  average  larger,  but  on  the  other  hand, 
there  is  less  water  to  pump. 

Efficiency  of  Labor  a  Function  of  the  Cost. — The  point  I  am  seeking 
especially  to  bring  out  is  that  criticism  has  been  applied  to  the  inefficiency 
of  Rand  labor  as  if  it  were  a  special  case,  and  that  because  wages  average 
low  on  the  Rand  costs  ought  to  be  correspondingly  low.  I  contend  that 
this  assumption,  if  carried  beyond  certain  narrow  limits,  is  an  incorrect 
one,  and  if  established  it  would  be  in  opposition  to  a  general  economic  law. 

President  Roosevelt's  great  work  has  often  been  called  a  reaffirma- 
tion  of  the  Decalogue.  I  am  afraid  that  the  conclusions  I  have  arrived 
at  are  of  the  same  class.  You  will  remember  the  scriptural  phrase, 
"The  laborer  is  worthy  of  his  hire,"  and  the  common  proverb  that  the 
" Workman  is  known  by  his  tools."  These  statements  contain  the 
essence  of  the  problem  of  the  cost  of  labor,  always  the  fundamental  and 
final  element  in  the  cost  of  anything.  The  gist  of  the  whole  subject  was 
tersely  stated  by  the  first  Lord  Brassey,  the  great  English  contractor, 
who  said  that  the  same  work  costs  the  same  money  anywhere  regardless 
of  the  price  of  wages.  The  workman,  the  tools,  and  the  wages  go  hand 
in  hand.  Good  wages  command  through  competition,  effective  workers. 
Good  workmen  create  efficient  tools. 

On  the  other  hand,  it  is  a  truism  to  say  that  high-class  tools  and 
machinery  can  only  be  used  by  men  who  have  intelligence  enough  to 
secure  the  wages  their  efficiency  justifies.  Where  a  man's  idea  of  moving 
dirt  is  to  fill  a  basket  with  his  hands  and  carry  the  basket  on  his  head,  his 
wages  correspond  with  the  fruitfulness  of  his  idea;  he  earns  10  cents  a 
day.  Where  dirt  is  moved  by  the  complex  organism  of  modern  civilized 
industry  which  applies  external  power  through  the  agency  of  railroads 
and  steam  shovels,  the  men  who  operate  the  tools  are  better  paid.  The 
master  of  the  industrial  enterprise,  which  may  be  described  as  the  greatest 
tool  of  all,  a  mechanism  fashioned  by  the  combined  efforts  of  countless 
brains  to  direct  the  united  efforts  of  men  and  energy  to  useful  work,  is 
pretty  sure  to  be  a  millionaire;  the  man  who  runs  the  steam  shovel  gets 
$5  a  day;  the  laborer  who  moves  the  ties  in  front  of  the  steam  shovel 
gets  $2  a  day.  In  the  world's  market  the  product  is  worth  the  same 
thing  whether  it  is  the  result  of  an  industrial  miracle  or  of  infinite  but 
stupid  human  labor.  When  mankind  produces  efficiency  it  gets  a  due 
return  for  it,  a  return  which  is  expressed  pretty  accurately  in  wages. 

A  Rule  Without  Exceptions.— The  only  reason  why  these  conclusions 
are  not  accepted  as  truisms  is  that  people  are  suspicious  of  each  other 


QUARTZ-PYRITE  GOLD  MINES  485 

and  are  accustomed  to  doubt  the  fairness  of  the  distribution  of  wealth. 
That  this  distribution  is  a  matter  the  fairness  of  which  can  only  be 
guaranteed  by  ceaseless  vigilance,  it  is  a  folly  to  doubt;  but  on  the  whole 
I  believe  every  body  concerned  does  exert  vigilance,  a  vigilance  made 
instinctive  by  the  fundamental  laws  of  the  evolution  of  life,  and  on  the 
whole,  the  distribution  is  pretty  fair.  To  avoid  possible  errors,  however, 
we  had  best  perhaps  not  apply  this  generalization  to  work  of  an  ephemeral 
character  but  only  to  permanent  or  semi-permanent  industries  where 
labor  has  time  to  adjust  itself  to  competition. 

But  here  we  have  to  meet  the  question,  Are  not  modern  methods 
employed  in  South  Africa  and  India?  Have  we  not  sent  there  our  best 
engineers,  our  most  modern  machinery,  and  our  best  methods?  If  so, 
then  why  are  not  the  men  more  efficient  and  the  wages  higher?  I 
answer  that  it  is  indeed  true  that  we  have  sent  many  cilivized  appliances 
to  those  places,  but  not  all.  Among  the  things  we  have  not  sent  are  the 
surroundings,  point  of  view,  ambition,  and  energy  of  a  civilized  commu- 
nity. The  few  hundred  or  few  thousand  Europeans  who  operate  mines 
in  Africa  or  India  are  immersed  in  an  ocean  of  black  humanity,  upon 
which  the  small  foreign  community  has  an  influence,  true  enough,  but 
not  such  an  influence  as  to  revolutionize  the  habits,  aims,  and  expecta- 
tions of  the  natives.. 

An  enterprise  so  situated  must  take  into  account  at  the  beginning  the 
state  of  mind  of  its  future  employees,  and  it  would  be  silly  to  make  such 
plans  as  might  run  counter  to  their  prejudices;  and,  even  if  the  manager 
hopes  to  make  the  natives  eventually  as  effective  as  Europeans,  he 
would  have  to  plan  his  operations  on  a  different  basis.  As  a  matter  of 
fact,  such  an  expectation  is  hopeless;  an  individual  Kafir  or  Hindoo  may 
fill  a  certain  position  as  effectively  as  an  European,  but  to  expect  a  large 
body  of  such  people  to  become  collectively  as  effective  as  a  body  of 
Europeans  whose  ideas  had  been  trained  for  generations  along  lines  making 
for  an  entirely  different  standard  of  effort  is  quite  absurd.  A  consid- 
erable body  of  whites  may  indeed  supply  a  certain  amount  of  mental 
and  nervous  energy  to  the  natives  which  the  latter  could  not  supply  for 
themselves,  but  in  so  doing  the  white  men  must  use  up  energy  in  the  direc- 
tion of  others  that  they  might  otherwise  use  in  their  own  labors. 

If  a  body  of  colored  men  in  a  colored  man's  country  is  going  to 
turn  out  work  under  the  direction  of  white  men  as  cheaply  as  the 
white  men  can  do  it  themselves  in  their  own  country,  they  must  do  it 
by  working  for  lower  wages.  This  is  exactly  what  happens  in  every 
case.  It  is  a  rule  to  which  there  are  no  exceptions. 

Note  in  1919. — This  chapter  has  been  left  as  it  was.  In  no  other 
metal  have  there  been  so  few  vital  changes.  In  regard  to  the  Transvaal 
one  pertinent  remark  may  well  be  quoted  from  the  " Mining  Magazine" 
of  London — "  about  60  per  cent,  of  working  profits  are  available  for 


486 


THE  COST  OF  MINING 


dividends."  This  is  something  that  applies  to  all  mines  and  all  forms  of 
business  in  varying  degrees,  of  course,  in  particular  cases.  But  a  large 
part  of  so-called  earnings  are  absorbed  in  various  projects,  overhead 
expenses  and  taxes. 

PRODUCTION  OF  GOLD  IN  THE  TRANSVAAL 


Rand, 
oz. 

Elsewhere, 
oz. 

Total, 
oz. 

Value 

January   1918     

694,121 

19,991 

714,182 

£3,033,653 

February 

637,571 

22,188 

659,759 

2,802,477 

March             

677,008 

19,273 

696,281 

2,957,614 

April                                       •      .  • 

697,733 

19,366 

717,099 

3,046,045 

May  
June 

720,539 
708,908 

20,778 
18,788 

741,317 
727,696 

3,148,915 
3,091,058 

July  
August  
September  
October 

716,010 
719,849 
686,963 
667,955 

20,189 
20,361 
21,243 
11,809 

736,199 
740,210 
708,206 
679,764 

3,127,174 
3,144,211 
3,008,267 

2,887,455 

November  

640,797 

17,904 

658,701 

2,797,983 

December  

630,505 

10,740 

641,245 

2,723,836 

Year  1918  

8,197,959 

221,734 

8,419,693 

35,768,688 

January,  1919  
Februarv  .... 

662,205 
621  188 

13,854 
15  540 

676,059 

636  728 

2,871,718 
2  704  647 

March 

694  825 

17  554 

712  379 

Q  025  QQ2 

April  

676  702 

18  242 

694  944 

2  951  936 

NATIVES  EMPLOYED  IN  THE  TRANSVAAL  MINES 


Gold 
mines 

Coal 
mines 

Diamond 
mines 

Total 

January  31,  1918 

176  424 

1  1  46Q 

4  71  x 

1  Q9  fiOS 

February  28  
March  31  

181,066 
183  055 

11,243 
1  1  076 

4,825 
4-  74-^ 

197,134 

1  no  Q7fi 

April  30  

182  492 

11  322 

4  7^ 

1  QC    Kfi7 

May  31  

179  879 

U91  1 

4.  77Q 

1  QC  CAQ 

June  30  

179  028 

U47Q 

47/17 

I  QK   9/1  si 

July  31  

178  412 

U7QO 

^  01  1 

1  Q^  91  *} 

August  31  

179  390 

nnr;n 

4.  0^4. 

1  Qfi  9Qzt 

September  30  
October  31 

179,399 

ml  KO 

12,108 

nS94. 

4,889 

4*7/4  O 

196,395 

November  30.  . 

160  275 

U&9A 

,  /'ly 
4.  01  A 

ioy,  /  Jlo 

1  ^A  117 

December  31  

152,606 

11,851 

3,180 

1  /  0,  1  1  / 

167,637 

January  31,  1919  

160  5QQ 

nQAQ 

3CQQ 

mOQA 

February  28  

172  359 

nOfJO 

,ooy 
49A4. 

,yoo 

1  ftQ  4.O1 

March  31  

175  620 

HI  RS 

5f)Q(\ 

j.ooj'iyi 

April  30  

175  2fi7 

nQOft 

,UoU 
5*7/19 

,oDo 

,  l'±£i 

iyz,yio 

QUARTZ-PYRITE  GOLD  MINES 


487 


COST  AND  PROFIT  ON  THE  RAND 

Compiled  from  official  statistics  published  by  the  Transvaal  Chamber  of  Mines. 
The  profit  available  for  dividends  is  about  60  per  cent,  of  the  working  profit. 


Tons 
milled 

Yield 
per  ton 

Working 
cost 
per  ton 

Working 
profit 
per  ton 

Total 
working 
profit 

January,  1918  
February  
March 

2,167,411 
1,946,338 
2  107  581 

s.        d. 

27     1 

27     8 
27     1 

s.        d. 
20      7 

21     7 
21     4 

s.       d. 

6       4 
5     11 

£           Q 

£703,665 
577,396 
^Q6  10Q 

April  
May 

2,181,609 
2,237  644 

27     0 
27     3 

20     8 

9Q      6 

6       2 
6       5 

670,871 
716  963 

June  

2,124,205 

28     2 

21     0 

6     11 

736  694 

July.. 

2,167,869 

27  10 

21     2 

6       6 

702  360 

August  

2,158,431 

28     1 

21     7 

6       3 

676  146 

September  
October 

2,060,635 
2,015,144 

28     2 
28     0 

22     0 
22     5 

5     10 
5       3 

600,330 

531  774 

November  
December  

1,899,925 
1,855,991 

28     5 

28     7 

23     1 
23     0 

5       1 
5       6 

480,102 
507,860 

Year  1918  

24,922,763 

27  11 

21     7 

6       0 

7,678,129 

•i 

January,  1919 

1,942,329 

28     9 

23     0 

5       8 

547  793 

February  

1,816,352 

28     9 

23     2 

5       6 

498,204 

PRODUCTION  OF  GOLD  IN  RHODESIA  AND  WEST  AFRICA 


Rhodesia 

West  Africa 

1918 

1919 

1918 

1919 

January  
February  

£253,807 
232,023 
230,023 
239,916 
239,205 
225,447 
251,740 
257,096 
247,885 
136,780 
145,460 
192,870 

£211,917 
220,885 
225,808 
213,160 

£107,863 
112,865 
112,605 
117,520 
126,290 
120,273 
117,581 
120,526 
115,152 
61,461 
108,796 
112,621 

£104,063 
112,616' 
112,543 
109,570 

March  .  . 

April  

May  

June  .... 

July  

August  
September 

October  
November  
December  . 

Total  

2,652,250 

871,770 

1,333,553 

438,792 

TRANSVAAL  GOLD  OUTPUTS 


April 

1919 

Treated, 
tons 

Value 

Aurora  West  
Bantjes.                 .        

13,800 

£  13,640 

Barrett                                                                 

674 

Brakpan  
City  &  Suburban                                      

47,500 
17,342 

88,908 
28,374 

City  Deep 

48,500 

97209 

Cons.  Langlaagte  
Cons.  Main  Reef 

45,000 
47,300 

55,546 
7  753 

Crown  mines  
Durban  Roodepoort  Deep 

158,000 
25,200 

217,122 
35  025 

East  Rand  P.M  
Ferreira  Deep 

110,000 
32,300 

138,201 
56  264 

Geduld  

42,000 

61,920 

Geldenhuis  Deep  

47,500 

54,081 

Ginsberg  

10,520 

10081 

Glynn's  Lydenburg  

3,970 

7,217 

Goch. 

16  600 

11  926 

Government  G.M.  Areas  
Heriot 

116,000 
10  610 

204,450 
14  678 

Jupiter  

21  200 

23  636 

Kleinfontein  *  , 
Knights  Central  
Knights  Deep  

57,900 
20,000 

82  900 

71,179 
29,963 
70  507 

Langlaagte  Estate  
Luipaard's  Vlei  
Meyer  &  Charlton  
Modderf  ontein  
Modderfoncein  B  
Modderf  ontein  Deep  

40,000 
20,000 
13,640 
82,000 
54,000 
41  100 

52,331 

39,396 
173,162 
121^206 

88  943 

New  Unified  

12  000 

11  855 

Nomse  

38  100 

KQ  824 

Primrose  

19  000 

17  159 

Princess  Estate  
Randf  ontein  Central  

19,400 
138  000 

25,382 
162  705 

Robinson  . 

o«  qnn 

41  81  9 

Robinson  Deep 

4^  °,00 

«i  7^0 

Roodepoort  United  

24,200 

22  835 

Rose  Deep  

KQ  ooo 

«0  Q(\0 

Simmer  &  Jack  
Simmer  Deep  

46,800 

90  fiOO 

45,652 

QC   7CQ 

Springs  

9,4  Q40 

fi7  9Q7 

Sub  Nigel  
Transvaal  G.M.  Estates  
Van  Ryn  

9,519 
14,980 

QK    I  KQ 

24,158 
23,812 

QQ   Q74 

Van  Ryn  Deep  

4-7  400 

1  HQ    XKQ 

Village  Deep  
Village  Main  Reef  

43,400 
17  700 

62,547 
22  935 

West  Rand  Consolidated  

32  000 

Q7  71C 

Witwatersrand  (Knights)  
Witwatersrand  Deep 

32,500 

40,733 

Wolhuter  

oc  Knn 

OK  oo  r 

QUARTZ-PYRITE  GOLD  MINES 
WEST  AFRICAN  GOLD  OUTPUTS 


489 


April, 

1919 

Treated, 
tons 

Value 

Abbontiakoon  
Abosso 

8,002 
7,100 

£16,217 
12  255 

Ashanti  Goldfields 

8  139 

8  862 

Prestea  Block  A  
Taquah  

14,930 
5,100 

24,803 
14,234 

Wassau  :  

4,108 

RHODESIAN  GOLD  OUTPUTS 


April,  1919 


Treated, 
tons 

Value 

Antelope                                                                                 •  • 

3,200 

£  4  722 

Cam  &  IVIotor 

Eldorado  Banket  

4,021 

10,233 

Falcon                                   

14,522 

28,036* 

Gaika                                                                  

3,066 

5,310 

Globe  &  Phoenix  
Lonely  Reef                                                     

5,754 
4,640 

7,976f 
24,434 

Rezende                        

5,300 

13,597J 

Rhodesia  Ltd                                            

345 

1,271 

Shamva            .        

56,595 

33,916 

Transvaal  &  Rhodesian  
Wanderer          

1,800 
10,070 

5,400 
3,286 

*Gold,  Silver,  and  Copper. 


t  Ounces  Gold. 


t  Gold  &  Silver 


CHAPTER  XXVIII 

CRIPPLE   CREEK,  KALGOORLIE,  AND  GOLDFIELD 

DEVELOPMENT  OF  CRIPPLE  CREEK  AND  KALGOORLIE — THE  GEOLOGY  OF  CRIPPLE 
CREEK — ESTIMATE  OF  AGGREGATE  RESULTS — PORTLAND  MINE — KALGOORLIE — 
THE  COSTS  OF  FIVE  PROMINENT  MINES — COMPARISON  OF  CRIPPLE  CREEK  AND 
KALGOORLIE — GOLDFIELD,  NEVADA — GOLDFIELD  CONSOLIDATED  MINES  Co. — 
ESTIMATE  OF  COSTS. 

CRIPPLE  CREEK  AND  KALGOORLIE 

THESE  two  important  gold-mining  districts  were  discovered  and 
opened  on  opposite  sides  of  the  globe  at  about  the  same  time,  shortly 
after  1890.  Their  appearance  added  greatly  not  only  to  the  output  of 
the  yellow  metal  but  also  to  the  interest  in  mining  enterprises.  It  was 
confidently  believed  for  a  number  of  years  that  they  represented  a  type 
of  ore  deposits  that  had  before  been  overlooked  on  account  of  their  re- 
fractory nature  and  their  elusive  non-spectacular  appearance;  in  other 
words,  because  they  were  hard  to  treat  and  hard  to  find,  and  that  many 
other  similar  ones  would  be  discovered.  This  expectation,  though 
natural,  has  not  been  borne  out  by  events;  for  no  important  new  districts 
of  the  same  type  have  been  discovered  since,  and  the  original  camps  after 
a  rrstory  of  less  than  twenty  years  find  themselves  already  old  and  de- 
clining in  real  and  comparative  importance.  Nevertheless,  their  develop- 
ment and  exploitation  have  been  exceedingly  interesting  episodes  in  the 
history  of  gold  mining  and  the  men  who  took  part  have  added  much  to 
the  science  of  mining  and  metallurgy  not  only  in  gold  in  but  other  metals. 

The  parallellism  between  the  two  districts  is,  I  believe,  more  apparent 
than  real.  About  the  only  point  in  common  is  the  occurrence  of  tellu- 
rides  of  gold,  but  even  in  that  particular  the  similarity  is  not  by  any 
means  complete.  At  Kalgoorlie  only  a  part  of  the  gold  is  associated  with 
tellurium,  while  at  Cripple  Crreek  it  nearly  all  is.  The  result  is  that  in 
the  two  camps'  the  metallurgical  problem  is  different;  at  least  it  has  been 
worked  out  differently. 

When  we  come  to  geological  and  structural  relations  there  is  little 
similarity.  At  Kalgoorlie  the  veins  are  in  a  volcanic  formation,  ap- 
parently of  great  geological  age,  that  has  been  subjected  to  severe  and 
deep-seated  dynamic  action,  resulting  in  the  formation  of  strong  lodes 
in  shear  zones. 

490 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD  491 

CRIPPLE  CREEK  MINES 

Cripple  Creek,  on  the  other  hand,  presents  deposits  in  an  extinct 
but  geologically  recent  volcano.  The  rocks  have  not  been  subject  to 
dynamic  or  metamorphic  action,  except  those  incident  to  the  formation 
of  the  veins.  The  productive  area  is  elliptical  in  outline  with  a  length 
of  about  five  miles  from  N.W.  to  S.E.  and  a  width  of  three  miles  from 
N.E.  to  S.W.,  and  contains  numerous  veins  throughout,  but  the  most- 
valuable  ones  seem  to  be  near  the  periphery  of  the  volcanic  mass,  many 
being  in  the  enclosing  granites  at  or  near  the  contact. 

The  veins  are  apparently  all  of  the  same  age  and  of  the  same  charac- 
ter, being  deposits  in  fissures  that  result  from  adjustments  following  the 
cooling  of  the  volcano.  There  was  very  little  faulting  along  the  veins 
either  preceding  or  following  the  mineralization.  The  deposits  vary  in 
character  according  to  the  intensity  of  the  mineralization  along  the 
fissures  and  according  to  the  character  of  the  rocks  traversed  by  the 
fissures.  In  some  cases  a  vein  will  be  merely  the  quartz  filling  of  an 
open  crevice  with  very  little  impregnation  of  the  wall  rocks.  In  other 
cases,  the  deposit  of  quartz  in  the  fracture  planes  is  minute  in  quantity, 
but  extends  out  into  innumerable  joint  planes  along  which  there  has 
been  a  limited  impregnation  of  the  wall  rocks.  In  this  case  the  workable 
ores  have  the  form  of  a  stock-work.  In  still  other  cases  the  walls  of  a 
fissure  are  altered  considerably  for  several  feet  on  each  side  of  the  crevice 
by  the  introduction  of  new  quartz  replacing  certain  minerals  in  the 
original  rocks.  This  occurs  more  commonly  in  the  granite,  but  some- 
times in  basalt  dikes,  and  wherever  it  happens  the  ore  becomes  a  homo- 
geneous mass. 

Speaking  generally,  the  ore  deposits  are  either  too  small  or  too  im- 
perfectly mineralized  to  allow  of  the  mining  of  merchantable  ore  in 
mass.  A  large  amount  of  waste  must  be  broken,  of  such  character  that 
it  can  better  be  rejected  by  hand  sorting  than  by  any  other  means. 
While  it  is  not  possible  to  give  exact  figures  on  this  point  it  is  a  fair 
estimate  that  only  40  per  cent,  of  the  material  stoped  is  shipped  to  the 
mills.  The  amount  of  development  work  required  is  very  great.  Up 
to  1903  it  appears  that  some  2,300,000  ft.  of  shafts,  drifts,  crosscuts, 
raises,  and  winzes  had  been  dug  for  a  total  output  of  some  3^  million 
tons  of  shipping  ore  and  some  9  million  tons  of  ore  stoped. 

Since  the  development  work  may  be  estimated  io  average  some  $14 
a  foot,  it  appears  that  it  must  have  cost  at  least  $8  a  ton  for  all  ore  shipped 
from  the  district  up  to  that  time,  for  development  alone.  The  cost  of 
stoping  the  same  ores  must  have  averaged  not  less  than  $8  a  ton  more. 
The  cost  of  freight  and  treatment  in  mills  and  smelters  may  be  estimated 
at  an  additional  $9  or  $10,  so  that  the  total  cost,  exclusive  of  plant, 
was  $26  per  ton  shipped  and  certainly  more  than  $10  per  ton  stoped. 


492 


THE  COST  OF  MINING 


If  we  add  the  plants,  the  total  estimate  for  all  ores  will  not  fall  far  short 
of  $30  per  ton  shipped,  and  $12  per  ton  stoped.  The  ores  averaged 
probably  $36  a  ton,  leaving  a  profit  of  about  $6  a  ton  or  less  than  18 
per  cent,  of  the  gross  value.  These  figures  being  for  the  district  as  a 


FIG.  11. — Illustration  of  the  development  work  in  the  Portland  mine  and  vicinity, 
where  1  foot  of  opening  work  has  been  necessary  for  mining  4^  tons  of  shipping  ore. 


whole,  they  naturally  include  a  good  many  failures.  Some  of  the  mines 
have  secured  lower  costs  throughout  their  history,  and  many  are  securing 
much  lower  costs  now.  The  dominant  factor,  however,  in  lower  costs 
is  the  lowering  grade  of  the  ore.  In  1899  the  ore  shipped  averaged  $36.73 
per  ton.  In  1906  the  average  had  fallen  to  $20.35  per  ton. 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD 


493 


POETLAND  MINE 

This  is  the  best  mine  in  the  district  and  it  presents  good  examples 
of  all  the  types  of  deposit  known  in  Cripple  Creek.  Most  of  the  ore 
has  come  from  an  area  of  some  60  acres  in  which  there  have  been  done 
up  to  the  end  of  1908  above  the  1500  ft.  level  no  less  than  212,593  ft. 
of  development  work.  This  development  was  necessary  to  open  up  a 
great  number  of  veins,  some  of  which  were  independent  and  others  had 
a  mineralized  connection  with  other  veins.  The  total  production  of 
shipped  ore  was  949,382  tons,  valued  at  $29,430,842,  giving  an  average 
of  $31  per  ton.  The  total  amount  stoped  may  be  estimated  at  2,400,000 
tons,  so  that  we  may  estimate  that  it  required  one  foot  of  development 
work  for  every  4J^  tons  shipped  and  for  every  11  tons  stoped. 

The  dividends  paid  up  to  1908  amounted  to  $8,227,8001  and  the 
quick  assets  to  approximately  $500,000  more,  making  total  earnings 
$8,727,000,  equal  to  $9.30  per  ton  shipped.  A  rough  estimate  of  average 
costs  is  as  follows: 


Per  ton, 
shipped 

Per  ton, 
crude 

Development 

$3  00 

$1  20 

Plant  

1.50 

0.60 

Stoping                                                                         

8.00 

3.20 

Freight  treatment  and  deductions 

9  20 

3  68 

Total 

$21.70 

8.68 

The  recent  history  of  the  mine  shows  much  lower  costs  largely  due 
to  a  diminution  of  the  grade  of  the  ore  and  of  the  amount  of  develop- 
ment work  done,  and  also  to  the  fact  that  the  company  has  been  milling 
its  own  ores.  In  1903  the  mine  was  shipping  ores  at  averaging  $30  per 
ton  and  doing  one  foot  of  development  work  for  4^  tons  shipped.  In 
1908  the  grade  of  the  ore  had  fallen  to  $19.45  per  ton  shipped  and  the 
development  work  was  only  one  foot  to  16  tons  shipped. 

The  last  report  that  gives  operating  costs  in  detail  is  that  for  1905, 
from  which  I  get  the  following  data: 

The  costs  were  as  follows: 

Tons  shipped 109,232 

Average  yield  per  ton  after  deducting  mill  losses     21 . 96 

Development  work  accomplished 21,073  feet,  equal  to  one  foot  to 

5^  tons. 

Grouping  the  costs  per  ton  shipped  it  appears  that  the  expenses  at 
the  mine  were  $9.36  and  those  at  the  mill,  including  transporation,  $5.94. 
The  extraction  of  the  mill  was  95.82  per  cent. 

1  In  the  ten  years  since  this  date  the  mine  has  paid  only  about  $2,000,000. 


494 


THE  COST  OF  MINING 


Per  ton, 
shipped 

Per  ton, 
sloped  esti- 
mated at  2^ 
times  amount 
shipped 

Qf  onincr                                    

$7.85 

$3.14 

0.29 

0.12 

1.22 

0.49 

1.37 

0.55 

IVIillins  ftiid  construction                         

3.49 

1.40 

1.00 

0.40 

frpTiprfll  pxDPiise                                                   

0.08 

0.03 

Total  cost                                          

$15.30 

$6.12 

Profit  per  ton                          

6.66 

2.26 

When  we  consider  that  the  ore  thus  treated  is  obtained  by  rejecting 
at  the  mine  a  large  part  of  the  ore  stoped,  and  that  the  rejection  means  a 
loss  of  some  low-grade  ore  which  must  be  computed  to  average  some  $2.50 
per  ton,  we  find  that  the  losses  from  sorting,  assuming  that  60  per  cent, 
is  rejected,  must  equal  $1.50  per  ton  stoped.  On  this  basis  it  appears 
that  the  grade  of  ore  that  can  be  mined  under  the  conditions  exhibited 
is  approximately  $>8  per  ton  where  sorting  can  be  practised,  and  where  the 
ore  can  be  shipped  without  sorting  it  must  be  $10  per  ton. 

With  the  still  lower  grade  ores  which  have  been  mined  since  1905  a 
certain  lessening  of  cost  is  obtained  by  diminishing  the  proportion  of 
development  work  and  on  account  of  the  lower  transportation  cost  for 
lower  grade  ores.  The  freights  from  the  mine  to  the  mill  are  based  on  a 
sliding  scale  according  to  the  grade  of  the  ore. 


MILLING1 

The  mill  in  which  the  ores  were  treated  was  built  in  1901  at  Colo- 
rado Springs,  some  forty-five  miles  from  the  mine.  The  cost  of  the 
milling  plant  is  given  at  $910,000.  Owing  to  the  steady  diminution 
both  in  volume  and  in  grade  of  the  ore  it  does  not  seem  unfair  to  expect 
the  practical  exhaustion  of  the  mine  within  a  few  years.  The  amount  of 
ore  treated  in  the  past  by  the  mill  is  approximately  600,000  tons  and  it 
does  not  seem  unreasonable  to  charge  the  ore  with  $1  per  ton  for  the 
amortization  of  capital  in  the  mill.  It  must  be  remembered  that  this 
capital  was  obtained  by  withholding  dividends  from  the  stockholders, 
and  the  ore  now  being  treated  is  enjoying  the  value  thus  created. 

The  mill  treatment  consists  of  dry  crushing,  followed  by  careful 
roasting  of  all  the  pulp;  chlorination  in  barrels  and  concentration  of  the 

1  This  mill  was  recently  abandoned  in  favor  of  the  improved  cyanide  process  at 
the  Golden  Cycle  mill. 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD 


495 


tailings.  The  concentrates  shipped  amount,  I  believe,  to  about  1  per 
cent,  of  the  ore. 

The  Portland  mine  while  representative  in  a  way  of  the  whole  Cripple 
Creek  district  is  decidedly  a  better  mine  than  most  of  the  others.  Its 
costs  are  undoubtedly  below  the  average,  although  there  may  be  some 
like  the  Strong  and  the  Golden  Cycle,  which  have  enjoyed  lower  mining 
costs  on  account  of  having  a  more  homogeneous  ore.  Its  history  is 
fairly  indicative  of  the  district  in  which  variation  in  costs  is  probably 
due  in  the  main  to  development  work.  Many  properties  that  have  pro- 
duced just  as  good  ore  on  the  average  as  the  Portland  have  not  been 
profitable  because  their  output  has  been  spasmodic  and  the  earnings 
from  an  occasional  bonanza  have  been  absorbed  in  propecting. 

The  Portland  mine  has  been  well  and  energetically  managed  from  its 
very  beginning.  It  has  created  its  plant  out  of  earnings  and  has  con- 
sistently made  money  for  its  stockholders.  From  time  to  time  there  has 
been  criticism  of  its  management  and  methods,  but  I  am  convinced  that 
such  criticism  has  on  the  whole  been  ill-considered,  being  based  largely 
on  comparison  with  other  properties  that  have  issued  only  partial  state- 
ments of  costs  for  limited  periods. 

Cripple  Creek  is  a  good  example  of  a  mining  camp  where  results  have 
not  been  fully  understood.  For  instance,  it  is,  or  was,  commonly  believed 
that  labor  in  Cripple  Creek  was  exorbitantly  paid  and  ineffective.  In 
my  opinion  the  truth  is  the  exact  contrary  of  this.  The  miners  of 
Cripple  Creek  have  always  been  an  exceedingly  intelligent  and  effective 
lot  of  men.  The  wages  average,  it  is  true,  some  $3.40  for  the  eight-hour 
shift,  but  competition  for  the  places  has  allowed  operators  to  work  with 
selected  men.  While  the  climate  is  fairly  healthful  the  altitude  of  10,000 
ft.  above  the  sea  certainly  diminishes  one's  endurance  as  compared  with 
sea  level  conditions;  but  to  clinch  the  argument  as  to  comparative  effici- 

896  FT.    DRIFTS  AVERAGING  5  FT.  BY  7  FT. 


Labor  Costs 

Per  Foot 

Tramming 

$898  38 

$1    00 

Pipe  and  trackmen  .  .                                    

125.12 

0.14 

Machine  men                                                                        .... 

1,686  00 

1.88 

Total  labor  

$2,709.50 

$3.02 

Other  Costs: 
Use  of  machines  air  etc                                                   .  .  . 

$867  .  57 

$0  97 

Repair  A  cars    etc 

69  98 

0  08 

Explosives                                                

1,279.76 

1.43 

Hoisting                                                                    .          

414  53 

0.46 

General  expense  surveying  assaying,  bosses 

515  20 

0  58 

Grand  total                                        

$5,556  54 

$6.20 

496 


THE  COST  OF  MINING 
1229  FT.  CROSSCUTS  5  FT.  BY  7  FT. 


Tramming                                         

$1,138.87 

$0.93 

149  37 

0  12 

Machine  men  

2,473.49 

2.02 

Total  labor                      

$3,761.73 

$3.07 

Other  Costs: 
Use  of  machines  air  etc                                   

$1,191.24 

$0.97 

Repairs  cars  etc 

111  28 

0  08 

Explosives                                                                

2,044.65 

1.66 

Hoisting                                               

656  .  67 

0.53 

General  expense,  surveying,  assaying,  bosses  

819.26 

0.67 

Grand  total                                                       

$8,684  83 

$7  07 

112  FT.  RAISES  AND  WINZES 


Tramming                                                                            .  . 

$105.76 

$0.094 

Pipe  and  truckmen  
Timbermen 

3.37 
133  17 

0.03 
1.19 

Machinemen     .  .                                                         

354.50 

3.17 

Total  labor   .  .                                                          

596  80 

$5.33 

Other  Costs: 
Use  of  machines,  air,  etc 

$186  25 

$1  66 

Repairs,  cars,  etc 

6  84 

0  06 

Explosives  

158  52 

1  41 

Lumber  and  timber  

170.65 

1.51 

Hoisting  

44  41 

0  40 

General,  bosses,  assaying,  etc  

50  37 

0.45 

Grand  total 

$1  213  84 

$10  84 

ency  of  the  highly  paid  labor  of  Cripple  Creek  with  that  of  other  places 
I  will  give  the  preceding  figures  on  the  cost  of  development  work  in  the 
Portland  mine  for  the  first  half  of  1903. 

The  grand  total  cost  for  all  underground  labor  was  $7.068  for  2237 
ft.  of  development  work,  equal  to  $3.11  per  ft.  While  it  is  not  possible 
to  pretend  that  these  figures  are  an  average  for  the  history  of  the  mine, 
it  is  evident  that  they  exhibit  a  good  record  of  labor  efficiency.  The 
rocks  through  which  these  openings  were  made  might  be  classed  as  erup- 
tive rocks  of  average  hardness,  being  andesites  and  granites.  There  was 
no  pumping  charged  against  these  costs. 

This  is  another  evidence  of  the  lack  of  correspondence  in  mining  costs 
between  rate  of  wages  and  the  cost  of  labor.  If  the  same  kind  of  work 
is  done  cheaper  anywhere  I  have  not  been  able  to  find  the  place. 

1919  Note.— Under  present  conditions  it  is  hard  to  see  how  any  of  the 
Cripple  Creek  mines  can  pay. 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD  497 

KALGOOBLIE  MINES 

As  remarked  above,  the  resemblance  of  Kalgoorlie  to  Cripple  Creek 
is  more  apparent  than  real,  being  based  largely  on  the  occurrence  of 
telluride  ores  in  both  places. 

The  external  factors  at  Kalgoorlie  are  much  less  favorable  on  account 
of  a  dry  hot  climate  and  long  distances  from  populous  centers.  The 
internal  factors  are  more  favorable  than  those  of  Cripple  Creek. 

The  lodes  in  Kalgoorlie  are  much  larger,  more  persistent,  and  better 
mineralized.  Instead  of  being  split  up  into  a  multitude  of  small  veins 
containing  short  and  inconstant  ore  shoots,  Kalgoorlie  mines  have  only 
a  few  lodes  which  present  ore  shoots  of  an  average  stoping  width  of 
11J-2  ft.  The  lodes  have  been  found  to  be  payable  to  a  depth  of  2600  ft. 
Comparing  the  two  districts  at  large,  it  is  probable  that  Kalgoorlie  has 
one  capital  advantage  in  having  a  much  smaller  proportion  of  develop- 
ment work  to  do.  Recollecting  that  all  Cripple  Creek  mines  seem  to 
require  one  foot  of  development  work  for  every  four  tons  stoped,  making 
a  cost  of  more  than  $3  per  ton  for  that  account  alone,  it  seems  that  Kal- 
goorlie enjoys  a  considerable  advantage  in  that  particular.  I  have, 
however,  no  means  of  obtaining  full  figures  for  the  whole  district  of 
Kalgoorlie,  upon  which  to  base  an  exact  comparison,  but  am  compelled 
to  draw  conclusions  from  the  records  of  some  individual  mines  as  com- 
pared with  the  Portland  mine. 

In  stoping  the  Kalgoorlie  mines  have  a  marked  advantage  in  being 
able  to  avoid  sorting.  The  ore  is  sent  to  the  mills  practically  as  it  is 
broken  in  stopes  of  considerable  width.  There  is  no  evidence,  however, 
that  the  cost  per  ton  of  rock  handled  is  any  lower  in  Kalgoorlie  than  it  is 
in  Cripple  Creek. 

When  we  come  to  milling  we  find  that  the  figures  are  somewhat  in 
favor  of  the  Australian  district.  The  ores  are  milled  on  the  spot,  thus 
avoiding  railroad  transportation  charges.  The  processes  themselves 
are  slightly  cheaper  than  those  employed  at  Cripple  Creek,  but  the  ex- 
traction of  the  gold  is  somewhat  less  perfect,  being  from  85  per  cent,  to  93 
per  cent,  as  against  about  96  per  cent,  in  the  Colorado  camp. 

Two  distinct  methods  are  employed  about  equally.  The  first 
method  is  wet  crushing  in  stamp  mills  followed  by  amalgamation,  by 
concentration  and  cyaniding  of  sands  and  slimes,  the  concentrates  alone 
being  roasted  and  then  treated  by  a  special  cyanide  process.  This 
process  effects  a  saving  of  from  85  to  93  per  cent,  of  gold  at  a  cost  of  from 
$2.21  to  $3.92  per  ton,  varying  according  to  the  size  of  the  mills  and  the 
grade  of  ore. 

The  alternative  process  consists  of  dry  crushing  in  ball  mills  followed 
by  roasting  the  entire  pulp  and  then  cyaniding.  This  process  saves  from 
90  per  cent,  to  92  per  cent,  of  the  gold  at  a  cost  which  seems  to  average 

32 


498  THE  COST  OF  MINING 

somewhat  higher  than  the  other  processes,  averaging  for  two  mines 
$4.20  per  ton  in  1905.  The  largest  mills  in  Kalgoorlie  have  a  capacity 
of  more  than  20,000  tons  a  month  as  against  10,000  tons  for  the  Portland 
mill.  It  is  possible  that  if  Cripple  Creek  ores  were  milled  on  the  same 
scale,  the  costs  would  be  lower  than  they  are.  When  we  come  to  con- 
sider the  difference  in  natural  advantages  between  the  two  points,  it  is 
evident  that  the  Kalgoorlie  ores  are  at  a  disadvantage.  They  have  to 
be  treated  under  the  most  unfavorable  conditions:  water,  coal,  and  all 
supplies  being  extremely  expensive,  while  in  Colorado  the  mills  pay 
little  or  nothing  for  water  and  are  situated  in  proximity  to  coal  mines. 
The  following  is  given  as  a  characteristic  analysis  of  ore: 

Silica 60      Percent. 

Alumina u      Per  cent- 

Ferrous  oxide. 5^  per  cent. 

Pyrites 7      Per  cent- 

Calcium  carbonate 7^  per  cent. 

Magnesium  carbonate 6      percent. 

Soda  and  potash 1^  per  cent. 

Water 1^  per  cent. 

The  following  table  illustrates  the  diminishing  grade  of  ore  with 
increasing  depth  in  the  Great  Boulder  mine : 

300-400 $29.60 

400-500 39.90 

500-600 49.50 

600-700 18.80 

700-800 28.70 

800-900 27.20 

900-1000 27.30 

1000-1100 24.60 

1100-1200 19.70 

1200-1300 19.80 

1300-1400 13.40 

1400-1500 14.  60 

1500-1900. . . 12.70 

If  we  assume  that  this  ore  is  worked  with  an  extraction  of  90  per 
cent.,  the  actual  yield  would  be  somewhat  less  than  $20  per  ton.  These 
figures  are  quoted  from  an  article  by  Mr.  G.  W.  Williams  on  "  Mining 
Practice  in  Kalgoorlie,"  in  the  Engineering  and  Mining  Journal  of 
January  25,  1908. 

Our  English  friends  have  been  disposed  to  believe  that  their  practice 
in  Kalgoorlie  has  been  superior  to  that  of  Colorado.  It  is  possible  that 
they  may  be  right  in  this  contention,  but  it  must  be  remembered  that 
they  do  not  secure  as  high  an  extraction  as  the  Colorado  mills,  and  in 
making  comparisons  of  costs  they  may  overlook  some  of  the  dominant 
factors.  In  order  to  convey  in  general  terms  a  comparison  of  the  opera- 
tions in  the  two  camps  I  present  the  following  tables  showing  the  results 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD 


499 


in  1905  at  five  of  the  principal  properties  of  Kalgoorlie,  trying  in  each  case 
to  present  the  figures  as  nearly  as  possible  in  the  same  manner  as  those 
given  for  Cripple  Creek,  and  reducing  all  statements  to  short  tons  and 
American  currency. 

Note  in  1919. — The  output  of  this  district  has  declined  enormously. 

KALGOORLIE  MINES — WHERE  ORES  ARE  CRUSHED  WET  IN  STAMP  MILLS  AND  ONLY 
CONCENTRATES  ROASTED.     RECORD  FOR  1905 — SHORT  TONS 


Ivanhoe 

Oroya-Brownhill 

Golden 
Horse- 
shoe 

Tons 

196  569 

112  713 

249  800 

Assay  value  per  ton 

$15  50 

$30  21 

$14  87 

Loss  in  milling 

2  36 

2  11 

1  65 

Yield  

13  14 

28  10 

13  22 

Feet  development  for  year  

6,808 

12,285 

8.047 

Cost  development  per  ton   .  .    . 

$0  82 

$1.43 

$0  49 

Current  construction 

0  65 

2  17 

1  08 

Working  Costs: 
Breaking  ore 

1  50 

0  83 

Filling  stopes  

0  24 

0.28 

Tramming  and  hoisting  

0.40 

0.58 

Total  mining  

2  12 

1.69 

2.24 

Rock  breaking 

0  09 

0.16) 

Ore  transport  

0  03 

0.12 

Milling  

0  50 

> 
0.51  1 

1.32 

Concentrating  

0.12 

o.isj 

Roasting  concentrates              }  1  ton  con- 

0  10 

(1  in  16)  0.12] 

Cyaniding  concentrates  t    centrates 
Fine  grinding  concentrates      J  to  18  crude 
Fine  grinding  sands 

0.06 
0.02 
0  16 

0.07 
0.09J 
0.31 

0.10 

Cyanide  by  percolation  

0.21 

0.98 

Cyanide  by  agitation                            .... 

0  60 

1.70 

Filter  pressing  
Precipitation  and  smelting           

0.15 
0.11 

0.40 
0.11 

0.13 

Re  -treating                                                 .  .  . 

0  01 

0.22 

Maintenance  

0.06 

Total  treatment                           

2.21 

3.92 

2.59 

General  expense  London  and  Kalgoorlie.  .  .  . 
Realization  of  bullion  
Deduct  profit  on  stores                        

0.51 
0.14 
0.10 

0.64 
0.25 
0.14 

0.42 
0.02 

Net  working  costs                                         •  • 

4.94 

6.36 

Taxes  

0.30 

0.80 

0.31 

Freight    and    treatment    on    ore    shipped 
(Golden  Horseshoe  =  $22.79  per  ton)  
Total  estimate  of  cost                                  •  • 

6.45 

10.76 

2.11 
9.26 

Losses  in  milling                         

2.36 

2.11 

1.65 

Total  costs  and  losses                   

8.81 

12.97 

10.91 

Profit  per  ton  

6.69 

17.24 

3.96 

Percentage  profit       

43 

57 

27 

500 


THE  COST  OF  MINING 
KALGOORLIE  MINES  WHERE  ALL  ORES  ARE  ROASTED 


Great  Boulder  Proprietary 


Great 
Boulder 
Persever- 


Tons                                      147,900  165,465 

Assay 'value' $20.56  13.94 

Loss  in  milling 2.47  1.30 

Yield 18.09  12.64 

Development  feet  incl.  diamond  drilling 7,373  14,163 

Costs  per  ton  treated 

Plant  expense 1-41  0.51 

Development 1-07  (average  3  yrs.)    ;         1 . 60 

Mining— Ore  breaking. !  2.07  2.20 

Treatment— Sulphides 2  13 

Cyanide  plant  (tailings) . .  1.01  0  95 

Tailings  distribution j  ....  0. 12 

Tailings  transport j  ....  0  35 

Realization  of  bullion 0.05  0.16 

Purchase  tailings •  •  •  •  0 . 04 

Insurance 

General  expense — London 0.31  0  24 

Kalgoorlie j  0.39  0.29 

Taxes  Australia j  0.49  0.11 

Grand  total  cost  per  short  ton 8.93  10.48 

Mill  losses 2.47  1 .30 

I 

$11.40  !    $11.78 

Profit  per  ton 9. 16  2. 16 

Percentage  profit 44  5  15.5 


Casting  up  an  average  of  the  ore  produced  by  these  mines  we  find 
that  the  assay  value  of  all  five  was  about  SI 7. 60  per  ton.  It  may  be 
interesting  to  make  a  sort  of  comparison  between  these  mines  and  the 
Portland  of  Cripple  Creek  in  order  to  observe  the  difference  in  results 
obtained  on  an  ore  of  equivalent  value  in  the  two  districts.  In  order 
to  avoid  the  labor  of  averaging  costs  let  us  take  the  results  of  the  Ivanhoe 
mine,  which  produces  ores  nearest  the  average  in  grade,  and  assume  that 
the  Portland  mine  were  producing  the  same  grade  of  ore,  using  the  costs 
reported  by  each  for  the  year  1905. 

Comparison  of  results  at  Ivanhoe  and  Portland  mines,  assuming  that 
each  produces  ore  averaging  by  assay  $15.50  per  ton,  but  that  the  Port- 
land mine  rejects  by  sorting  60  per  cent,  of  ore  stoped  and  that  the 
waste  rejected  averages  $2.50  per  ton:  (Table  follows.) 

The  Ivanhoe  is  stated  by  Mr.  J.  H.  Curie  ("Gold  Mines  of  the 
World")  to  be  the  best  managed  mine  in  Kalgoorlie.  Furthermore, 
it  is  one  in  which  the  wet  crushing  method  is  used.  Undeniably  it  is 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD 


501 


Ivanhoe 

Portland 

Tons  mined  per  foot  development  .  . 
Cost  development  

27 
$0  82 

Tons  mined  per  foot  development  . 
Cost  development 

13 

$0   4.Q 

Cost  for  current  construction  mine 
and  mill  

0  65 

Current  construction  mine  only  .  .  . 

0.12 

Mining  

2  12 

IVIining  and  sorting 

q   14. 

Sorting  losses  

0  00 

Sortinsr  loss  f>0  tipr  ppnt   nf  fl?9  ^0 

1    ^ft 

Transportation  to  mill  

0.03 

40  per  cent,  of  $2  00 

0  80 

Milling  

2  18 

40  per  cent  of  $3  50 

1    40 

Amortization    of     mill     (included 
under  construction)  .  .    . 

0  00 

40  ner  cent   of  ft1  OQ 

n  4ft 

General  expenses  

0  85 

(included  in  costs  mainlv) 

003 

Loss  in  milling  

2.36 

4  per  cent  of  $35  00 

1  40 

Total  costs  and  losses  

9.01 

9  28 

Deduct  profit  on  stores  

0.10 

0  00 

Net  cost  

8.91 

9  28 

Profit  per  ton  

6.69 

6  22 

Percentage  profit  

43 

40 

the  one  with  which  the  Portland  can  least  afford  to  compare  itself.  Were 
we  to  take  the  Great  Boulder  and  the  Perseverance  for  comparison  we 
should  find  the  figures  very  much  in  favor  of  the  Colorado  property. 
Those  properties  show  milling  costs  of  $3.19  and  $5.39  respectively, 
and  exhibit  the  following  comparison  (using  the  same  figures  for  the 
Portland  as  before). 


Great 
Boulder 
Proprietary 

Great 
Boulder 
Perseverance 

Portland 

Assay  value  of  ore  

$20  56 

$13  94 

$15.50 

Total  operating  costs 

8  93 

10  48 

6  38 

Loss  in  milling  and  sorting 

2  47 

1  30 

2  90 

Total  costs  and  losses 

11  40 

$11  78 

$9  28 

It  is  plain  that  there  is  no  ground  for  making  a  comparison  favorable 
to  one  district  and  unfavorable  to  the  other;  and  that  if  the  manage- 
ments in  the  two  districts  were  to  be  exchanged  the  stockholders  would 
not  have  much  cause  to  worry. 

Since  1905  the  mines  have  undoubtedly  succeeded  in  lowering  their 
costs  somewhat,  as  in  the  case  of  Cripple  Creek,  in  proportion  to  the 
diminishing  grade  of  the  ore.  The  Golden  Horseshoe  mine  in  the  years 
1907  and  1908  treated  554,131  tons  with  an  average  yield  of  $10.95. 
The  dividends  paid  were  $2,405,600,  equal  to  $4.34.  Assuming  that  the 


502  THE  COST  OF  MINING 

dividends  equaled  the  actual  profit,  the  cost  figures  out  at  $6.61  per  ton. 
This  compares  with  the  total  of  $7.15  for  the  same  mine  in  1905.  It  is 
to  be  remarked  that  in  the  tables  given  above  the  Golden  Horseshoe 
ships  7  per  cent,  of  its  ore  to  smelters  in  the  form  of  concentrates  and 
high-grade  ore.  This  imposed  a  further  cost  of  $2.11.  This  mine  is 
still  securing  a  profit  of  40  per  cent,  of  the  gross  value  of  gold  produced. 
Its  complete  record  for  eleven  years'  operation  shows  an  output  of  $33,- 
154,000  in  gold,  from  which  $13,468,000  have  been  paid  in  dividends, 
equal  to  41  per  cent,  of  the  gross  yield.  The  total  number  of  tons  treated 
is  not  given,  but  it  will  approximate  two  million,  so  that  the  yield  for  the 
life  of  the  mine  has  been  about  $16.70  per  ton  and  profits  $6.70,  leaving 
$10  a^ihe  cost  of  operating,  including  all  plant  and  development.  The 
records  of  the  mine,  however,  do  not  indicate  the  expenses  and  deductions 
incurred  for  shipping  ore  to  the  smelters,  simply  reporting  the  sums 
received  net  from  such  shipments.  If  these  expenses  were  included  it 
is  probable  that  they  would  make  an  addition  of  something  more  than 
$2  per  ton  to  the  costs  and  to  the  yield  of  gold,  making  the  total  costs 
something  more  than  $12,  and  the  yield  of  gold  approximately  $19  per 
ton.  If  the  extraction  averaged  90  per  cent.,  the  gross  assay  value 
of  the  ores  mined  would  be  about  $21,  which  approximates  very  closely 
to  that  of  the  Great  Boulder. 

No  mines  in  Cripple  Creek  have  produced  anything  like  such 
quantities  of  ore  of  this  grade,  nor  have  they  earned  such  large  dividends. 
The  fact  is  that  the  Kalgoorlie  camp  contains  only  nine  or  ten  mines  of 
first-class  importance,  but  these  have  produced  nearly  all  the  gold  and 
all  of  the  dividends  of  the  district.  In  them  the  values  have  been  con- 
centrated into  a  much  smaller  space  than  in  the  case  of  Cripple  Creek, 
where  the  output  has  come  from  a  large  number  of  comparatively  small 
producers,  and  where  payable  values  have  practically  ceased  at  a  depth 
of  1200  ft.  This  group  of  dividend-paying  properties  are  therefore  better 
and  higher  grade  mines  than  any  in  Cripple  Creek.  Their  outlook 
for  the  future  is  also  far  more  attractive.  The  Ivanhoe  reports  reserves 
of  934,000  tons,  averaging  $11.75  per  ton,  and  good  ore  at  the  1970  ft. 
level;  the  Golden  Horseshoe  1,065,000  tons  averaging  $12,  with  $15 
ore  on  the  2000  ft.  level;  the  Great  Boulder  731,000  tons,  averaging  $16, 
and  good  ore  on  the  2600  ft.  level;  the  Associated  483,517  tons,  averaging 
$10  per  ton;  in  each  case  assuring  the  product  for  3  to  4  years,  and  an  aver- 
age profit  of  40  per  cent,  of  the  gross  value.  It  would  not  be  surprising 
if  they  proved  payable  to  much  greater  depths. 

GOLDFIELD,  NEVADA 

This  district  was  discovered  in  1903  about  twenty  miles  south  of 
the  somewhat  older  camp  of  Tonapah,  the  success  of  which  had  served 
to  attract  many  prospectors  to  the  comparatively  old  mining  regions  of 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD  503 

Nevada.  The  discovery  in  that  year  of  some  rich  ore  on  the  Jumbo  and 
Combination  mines  started  a  considerable  excitement  during  1904  fol- 
lowed by  comparative  quiescence  during  the  latter  part  of  1905;  but  the 
discovery  of  an  extraordinary  bonanza  on  the  Mohawk  claim  in  April, 
1906,  encouraged  the  recrudescence  of  the  mining  boom  not  only  in 
Goldfield  but  in  other  parts  of  Nevada,  until  the  excitement  reached  by 
the  end  of  1906  a  degree  of  extravagance  for  which  it  would  be  hard  to 
find  a  parallel.  About  that  time  the  owners  of  the  Mohawk,  pursuing 
their  good  fortune  with  commendable  intelligence  and  energy,  secured 
most  of  the  promising  ground  in  the  camp  and  formed  the  Goldfield 
Consolidated  Mines  Company,  which  is  to-day,  after  a  period  of  re- 
organization and  development,  the  most  productive  and  profitable 
gold  mine  in  the  world. 

The  Goldfield  district  is  in  a  region  of  volcanic  rocks  of  doubtful 
but  probably  rather  recent  geological  age.  A  series  of  great  quartz 
veins,  or  rather  zones  of  silification  is  found,  indicated  by  a  series  of  bold 
outcrops  which  have  a  strike  usually  nearly  north  and  south.  It  seems 
probable  that  the  gold  belongs  to  a  later  mineralization,  because  the  quartz 
masses  are  nearly  or  quite  barren.  The  rich  ore  shoots  seem  confined  to 
smaller  fissures  that  traverse  the  great  quartz  masses  in  various  directions 
and  have  produced  a  considerable  amount  of  brecciation  in  them.  These 
later  fissures  often  cut  the  great  quartz  reefs  at  right  angles  and  the  ore 
shoots  seem  rather  more  apt  to  occur  along  the  flanks  than  in  the  interior 
of  the  reefs.  There  have  been  discovered  a  number  of  rich  bonanzas, 
probably  due  in  considerable  measure  to  a  process  of  reconcentration 
near  the  surface,  but  exploration  has  not  proceeded  deep  enough  to 
establish  this  as  more  than  a  probability. 

The  grade  of  the  ore  is  already  diminishing  rapidly  owing  to  causes 
that  are  universal  in  such  districts.  Owing  to  lack  of  treatment  facilities 
on  the  ground,  and  to  the  high  cost  of  transportation,  at  the  beginning, 
only  high-grade  ores  could  be  shipped.  In  1906  the  Mohawk  bonanza 
produced  in  eight  months  upwards  of  70,000  tons  of  ore  averaging  $120 
per  ton.  With  the  institution  of  milling  plants  on  a  large  scale,  lower 
grade  ores  can  be  treated  so  that  at  present  the  Goldfield  Consolidated 
is  mining  20,000  tons  a  month  of  ore  averaging  $40  a  ton.  That  such 
values  will  be  maintained  is  an  unreasonable  expectation  that  has  never 
been  indulged  in  by  the  management.  I  am  led  to  believe  that  the  actual 
developments  indicate  about  one-half  a  million  tons  of  ore  that  will 
average  between  $20  and  $25. 

During  1907  'and  1908  the  efforts  of  the  management  have  been 
directed  towards  the  completion  of  a  satisfactory  organization,  the  prose- 
cution of  development  and  the  construction  of  a  new  mill.  This  was  done 
so  successfully  that  at  the  beginning  of  1909  the  property  was  ready  to 
begin  extensive  operations  on  a  new  basis.  A  magnificent  modern  mill 


504  THE  COST  OF  MINING 

was  built  with  a  capacity  of  600  tons  a  day  with  a  railroad  to  provide  for 
transportations  of  ores  to  it,  together  with  some  additions  to  the  mining 
plant  at  a  total  expense  of  $900,000. 

During  1908  17,460  ft.  of  development  work  was  done  by  the  com- 
pany at  an  average  cost  of  $17.60  a  foot  and  20,463  ft.  were  done  by  leasers. 
The  amount  of  ore  developed  by  this  work  is  not  stated,  but  the  lessees 
shipped  only  25,600  tons  and  probably  did  not  put  much  ore  in  sight,  so 
that  this  portion  of  the  development  work  only  seems  to  have  opened  up 
to  lj^  tons  per  foot.  What  the  cost  for  development  will  average  is  a 
question  that  probably  will  only  be  determined  after  several  years' 
experience,  but  judging  from  the  large  amounts  done  to  date,  it  is  hardly 
likely  that  the  cost  per  ton  will  be  less  than  $2  from  this  item. 

The  cost  of  stoping  will  undoubtedly  vary  according  to  the  extent  to 
which  ore  must  be  sought  in  narrow  seams,  but  experience  to  date  seems 
to  indicate  that  ore  of  the  milling  grade  will  be  found  in  fairly  wide  stopes, 
so  that  the  cost  of  stoping  will  probably  be  about  $2.  In  addition  to  this 
the  report  for  1908  seems  to  indicate  that  general  expenses  will  approxi- 
mate 30  cents  per  ton  on  an  output  of  240,000  tons  a  year.  It  would  seem 
therefore,  that  the  cost  of  mining  might  be  calculated  at  about  $4.30. 

MILLING 

Mr.  J.  H.  MacKenzie,  manager,  describes  the  milling  process  briefly 
as  follows: 

"Crushing  in  gyratory  rock  breakers  and  stamps,  with  regrinding  to  slime  and 
tube  mills;  amalgamation  over  copper  plates  both  before  and  after  milling; 
concentration  by  means  of  Deister  slime  tables;  cyanidation  of  tailings  from 
cone  »ntrators  with  the  aid  of  Pachuca  agitators  and  Butters  filters  and  zinc 
dust  precipitation.  Concentrates  are  treated  in  an  auxiliary  plant  by  means  of 
a  modification  of  the  cyaniding  process,  and  products  from  all  departments  of 
the  mill  are  refined  and  shipped  directly  to  the  mint  as  gold  bullion." 

This  process  is  very  similar  to  that  employed  at  Kalgoorlie  and  it  is 
very  probable  that  the  costs  will  be  approximately  the  same.  Experience 
in  actual  operation  has  not  gone  far  enough  to  demonstrate  exactly  what 
it  will  be,  but  it  is  worth  remarking  that  the  mill  is  an  extremely  good  one 
and  works  with  the  greatest  precision,  giving  an  extraction  of  about 
94  per  cent.  gold.  If  we  assume  that  the  costs  will  be  the  same  as  at  the 
Ivanhoe  in  Kalgoorlie,  which  is  a  modern  mill  of  the  same  size,  namely, 
100  stamps,  we  may  calculate  the  cost  of  treatment  at  $2.20  a  ton  in- 
cluding transportation  from  the  mines. 

It  is  to  be  remembered  that  the  cost  of  the  plant  is  approximately 
$900,000.  Owing  to  the  erratic  character  of  the  ore  it  would  seem  wise 
to  amortize  the  plants  in  five  years,  which  would  make  a  calculation  for 
75  cents  a  ton.  We  may  also  calculate  that  current  construction  will 


CRIPPLE  CREEK,  KALGOORLIE,  AND  GOLDFIELD  505 

amount  to  about  25  cents  a  ton,  making  a  total  plant  cost  of  $1  per  ton 
treated.     On  this  basis  we  might  calculate  the  costs  as  follows: 

Mining $4 . 30 

Milling 2.20 

Construction 0 . 25 


Total  current  costs $6 . 75 

Add  for  amortization , 0 . 75 

Total  cost  per  ton $7 . 50 

With  an  extraction  of  94  per  cent,  these  costs  indicate  that  the 
minimum  assay  value  of  a  payable  ore  should  be  $8  a  ton. 

While  the  above  figures  are  given  only  as  approximations  it  is  never- 
theless true  that  they  are  made  with  some  reference  to  the  figures  un- 
officially given  out  by  the  company  for  the  present  year  and  they  may  be 
accepted  with  some  confidence. 

For  the  present,  year  the  yield  of  gold  from  this  property  promises 
to  be  enormous,  perhaps  $8,000,000  gross,  on  which  net  profits  upwards 
of  $5,000,000  may  be  realized.  Such  an  output  will  be  a  new  record 
among  the  gold  mines  of  the  world. 

Note  in  1919. — All  these  hopes  were  more  than  realized  for  a  few  years. 
In  1910  and  1911  more  than  $14,000,000  was  paid  in  dividends,  but  by 
1915  the  mine  had  become  practically  unprofitable  and  is  now  shut  down. 
For  details  of  cost  see  Peele's  Handbook. 


CHAPTER  XXIX 

SILVER  MINING  AT  COBALT  AND  GUANAJUATO 

PHENOMENON  OF  THE  SUDDEN  DECLINE  OF  THE  PRICE  OF  SILVER  COMPARED  WITH  GOLD 
— PRESENT  INFERIOR  POSITION  OF  SILVER  MINING — COBALT  AS  AN  EXAMPLE  OF 
HIGH  MINING  COSTS LOGIC  OF  COSTS KfiRR  LAKE TlNTIC CHIEF  CONSOLI- 
DATED— GUANAJUATO — TOMBSTONE. 

SILVER  MINING 

BY  far  the  greater  portion  of  the  silver  of  the  world  is  now  obtained 
as  a  by-product  from  mines  that  are  operated  chiefly  for  lead,  copper, 
or  gold;  and  in  this  connection  the  metal  has  been  frequently  touched 
upon  in  preceding  chapters.  There  are  only  a  few  conspicuous  districts 
now  where  silver  is  the  primary  object  of  the  mining  industry.  Some 


FIG.  12. — The  drop  in  value  of  silver. 


remarks  on  two  of  these,  Cobalt,  Ontario,  and  Guanajuato,  Mexico, 
are  sufficiently  interesting  to  warrant  insertion. 

The  present  obscure  position  of  silver  mining  is  due  to  one  of  the  most 
remarkable  economic  revolutions  in  history.  In  the  course  of  twenty- 
five  years  in  the  latter  part  of  the  nineteenth  century  silver  declined  in 
value  from  $1.30  to  about  55  cents  per  ounce,  and  in  so  doing  suddenly 
lost,  apparently  forever,  a  position  of  importance  as  the  companion 
of  gold  that  it  had  held  in  the  estimation  of  mankind  for  thousands  of 
years.  It  is  no  wonder  that  such  a  violent  and  unprecedented  fall 

506 


SILVER  MINING  AT  COBALT  AND  GUANAJUATO  507 

astounded  the  generation  that  beheld  it,  and  put  in  play  that  instinct 
which  attributes  any  mysterious  unpleasant  happening  to  design,  and 
which,  in  this  instance,  took  the  form  among  the  half -informed  of  an 
accusation  against  financiers  of  a  gigantic  "  conspiracy."  It  is  infinitely 
more  probable  that  the  financiers  of  the  world  understood  the  reasons 
for  the  fall  of  siver  as  little  as  other  people.  It  is  no  part  of  the  present 
work  to  offer  an  explanation;  merely  to  point  it  out  as  the  most  conspicu- 
ous example  of  a  great  commodity  suddenly  taking  a  price  level  radically 
different  from  its  traditional  one. 

The  comparatively  unimportant  position  now  held  by  silver  mines 
would  be  very  different  had  not  the  fall  in  prices  taken  place,  for  with 
silver  at  $1.29  an  ounce,  many  of  the  important  mining  districts  would 
be  more  valuable  for  their  silver  than  for  anything  else.  The  Cceur 
d'Alenes,  Park  City,  Tintic,  and  many  other  districts  would  be  so  changed 
in  the  relative  importance  of  the  metals  they  produce  that  they  could 
safely  be  called  silver-mining  camps  producing  lead,  gold,  and  copper 
as  by-products. 

COBALT  DISTRICT,  ONTARIO 

Cobalt  is  unique  not  only  on  account  of  the  geological  occurrence 
of  its  ores,  but  also  because  it  is  an  example  of  the  absolute  inconsequence 
of  high  costs  per  ton  in  precious  metal  mining.  So  far  as  I  know  the 
Cobalt  ores  are  mined  at  the  highest  cost  of  any  ores  of  importance  in 
the  world,  yet  their  silver  contents  are  secured  at  the  lowest  cost,  with 
the  largest  margin  of  profit.  The  district  belongs  to  the  same  series  of 
pre-Cambrian  rock  formations  that  has  proved  so  prolific  in  iron,  copper, 
and  nickel  near  the  shores  of  Lake  Superior;  but  at  Cobalt  the  orebodies 
instead  of  having  the  grandiose  character  so  universal  in  Lake  Superior, 
are  exceedingly  small,  disconnected,  and  rich.  The  geological  resem- 
blance to  Lake  Superior  extends  to  the  character  of  the  surface,  which 
is  highly  glaciated  and  covered  with  swamps  and  lakes  with  low  rounded 
knobs  of  more  resistant  rocks  forming  occasional  eminences  above  the 
generally  level  country.  The  rocks  consist  of  the  ancient  greenstone 
schists,  usually  called  the  Keewatin,  with  some  troughs  of  Huronian 
quartzites  and  conglomerates,  the  latter  invaded  by  dykes,  and  sills  of 
biabase.  The  veins  occur  in  all  of  the  rocks  to  some  extent,  but  chiefly 
in  the  sedimentary  formations. 

The  superficial  extent  of  the  district  is  several  thousand  acres,  but 
the  individual  orebodies  are  so  small  that  they  might  almost  be  described 
as  minute.  They  are  usually  only  from  one  inch  to  six  inches  wide  and 
from  a  few  feet  to  150  ft.  long,  and  ordinarily  of  no  great  depth.  This 
at  least  applies  to  the  ore  shoots.  Some  veins  that  are  barren  on  the 
surface  contain  ores  at  greater  depth.  While  the  absolute  bottom  of  the 
district  has  not  been  reached,  the  hopes  of  the  operators  are  more  fixed 


508 


THE  COST  OF  MINING 


on  discovering  new  veins  than  on  following  old  ones  in  depth.  The 
vein  filling  is  largely  calcite  with  some  quartz.  The  ore  consists  largely 
of  native  silver,  but  associated  with  it  are  some  of  the  richer  sulphides, 
dyscrasite,  argentite,  pyrargyrite.  With  the  silver  occurs  cobalt,  nickel, 
and  arsenic  in  smaltite,  niccolite,  and  other  minerals. 

The  problem  of  mining  such  ores  consists  largely  in  finding  them. 
Once  found  the  principal  problem  is  to  extract  them  cleanly— no  con- 
centrating process  being  so  efficient  for  the  purpose  as  hand  sorting. 


FIG.  IB. 

The  ores  once  secured  are  shipped  to  the  smelters  at  a  cost  for  freight, 
treatment,  and  deductions  of  over  $50  a  ton. 

But  the  ores  thus  mined  contain  750  oz.  of  silver  per  ton,  so  that  $50 
for  all  treatment  charges  only  means  7  cents  an  ounce.  The  cost  of 
mining  in  the  whole  district,  outside  of  treatment  charges,  seems  to  have 
averaged  about  $145  a  ton,  probably  divided  about  equally  between 
development  and  extraction.  Even  this  high  figure  only  means  20  cents 
an  ounce. 

It  is  almost  amusing  to  speculate  on  the  surprise  that  a  Lake  Superior 


SILVER  MINING  AT  COBALT  AND  GUANAJUATO  509 

miner  must  feel  at  such  tremendous  costs  per  ton;  nevertheless,  there  is 
not  the  slightest  ground  for  supposing  that  these  high  costs  do  not 
represent  just  as  good  mining  practice  as  any  in  Lake  Superior.  It  is  for 
the  purpose  of  illustrating  this  fact  that  the  mines  at  Cobalt  are  interest- 
ing in  a  work  on  the  cost  of  mining. 

Let  us  neglect  the  question  of  finding  ores  and  assume  that  it  costs 
$75  a  ton  to  get  them  out  of  the  ground.  What  does  this  mean  in  com- 
parison with  the  cost  of  say  $1  a  ton  for  mining  the  ore  at  the  Wolverine? 
Simply  that  it  takes  seventy-five  times  as  much  work  to  get  it  out.  That 
this  should  be  so  is  a  direct  result  of  the  size  and  thickness  of  the  ore  bodies. 
In  the  case  of  the  Wolverine  the  thickness  is  15  ft.  or  180  in.  and  the  ore 
is  placed  on  surface  for  $1  per  ton.  It  is  probable  that  if  the  ore  body 
were  only  4  ft.  thick  and  as  continuous  as  it  actually  is,  the  mining  cost 
at  the  Wolverine  would  be  about  $2  a  ton.  Now  since  an  opening  4  ft. 
wide  is  about  the  least  that  can  be  made,  a  cost  greater  than  $2  a  ton 
will  be  simply  an  inverse  ratio  of  the  actual  thickness  to  4  ft.  If  the 
Cobalt  ore  is  to  cost  $75  per  ton  we  might  calculate  the  thickness  of  it  at 
48  in.  -h  7%  =  1.28  in. 

A  continuous  seam,  then,  of  ore  1.28  in.  thick  ought  to  cost  $75  a  ton 
for  mining.  It  means  exactly  the  same  thing  if  a  series  of  bunches, 
averaged  up,  amount  to  a  mean  of  1.28  in. 

In  the  light  of  the  figures  there  is  no  mystery  in  the  fact  that  an  ore- 
body  1.28  in.  thick  may  be  a  bonanza.  It  is  worth  $400  a  ton.  If  this 
value  were  scattered  through  4  ft.  of  a  continuous  orebody,  it  would 
give  a  value  to  the  whole  mass  of  $11  a  ton,  equal  at  average  prices 
to  75  Ib.  of  copper,  which  every  one  would  recognize  as  a  bonanza. 
Such  an  orebody  would  give,  under  the  costs  prevailing  among  Lake 
Superior  amygdaloid  mines,  figures  something  as  follows: 

Mining  per  ton $2 . 00 

Surface  expense,  transportation,  and  milling 0 . 90 

Construction  and  amortization 0 . 50 

Smelting,  refining,  and  marketing 0 . 80 

Total S4.20 

Cost  per  pound  copper  about  5.6  cents. 

At  fifteen-cent  copper  the  profit  would  be  63  per  cent,  of  the  gross  value. 

If  we  scatter  the  values  through  a  mass  15  ft.  thick,  there  would  be 
the  equivalent  of  20  Ib.  copper  per  ton,  and  the  costs  would  be: 

Mining $1.00 

Surface,  expense,  transportation,  and  milling 0 . 65 

Construction  and  amortization 0 . 30 

Smelting,  refining,  and  marketing 0 . 22 

Total $2. 17 

Cost  per  pound  copper,  11  cents. 
Profit  on  gross  value,  27  per  cent. 


510 


THE  COST  OF  MINING 


In  the  case  of  the  4-ft.  orebody  the  costs  per  ton  would  be  approxi- 
mately twice  as  high  as  in  the  case  of  the  15-ft.  orebody  containing  the 
same  copper,  but  the  cost  of  copper  would  be  only  half  as  great  and  the 
profit  more  than  twice  as  much. 

This  makes  it  plain  enough  that  the  concentration  of  values  is  a  great 
economic  advantage. 

In  the  case  of  the  Cobalt  orebody  1.28  in.  thick  (always  neglecting 
the  question  of  prospecting),  on  the  theory  of  a  continuous  seam,  the 
results  are  as  follows: 

Mining  per  ton $75. CC 

Smelting  and  marketing 50 . 00 


Total  cost  per  ton 

Value  per  ton,  $400;  profit,  69  per  cent. 


$125.00 


But  in  Cobalt  there  is  no  continuity.  The  ore  must  be  looked  for 
at  an  additional  cost  of  $70  a  ton  so  that  the  actual  profit  is  reduced 
to  52  per  cent.  Nevertheless  it  is  quite  simple  to  show  that  a  natural 
concentration  in  values  involving  enormous  increases  of  cost  per  ton 
is  a  distinct  economic  advantage. 

RECORD  OF  COBALT  AS     A     WHOLE 

Tons  Ounces  silver  Value  Dividends 

1904-1908 48,545       35,083,300       $19,495,000     $10,000,000  ± 

9,495,000 
Cost  per  ton  =      43  545"    =  * 

Value  per  ounce,  55.7  cents 
Cost  per  ounce,  27  cents 


NIPISSING  MINE 
1904-1908 .8,449       8,145,834 


$4,540,000      $2,640,000 


Cost  per  ton  _  »-if°»J°99  _  ,184  ± 


Cost  per  ounce,  16  cents  ± 

NIPISSING  MINE,  1908 
Tons  shipped,  3505;  ounces  silver,  2,893,931;  ounces  per  ton,  826 


Costs 

Dollars 

Per  ton 

Per  ounce,  silver 

Operation  

$361,274  85 

$105  46 

$0.13011 

Depreciation 

44631  66 

13  03 

0  01607 

Marketing  ore  

174,775  66 

51  02 

0.06294 

Legal,  etc  

22  292  51 

6  50 

0  00803 

Less  income  

$27  761  61 

$8  10 

$0  01000 

Total  

$575  213  07 

$167  91 

$0  20715 

SILVER  MINING  AT  COBALT  AND  GUANAJUATO 


511 


There  is  good  reason  to  believe  that  the  above  figures  for  1908  are 
ample.  They  include  a  depreciation  charge  on  plant  and  buildings  of 
24  per  cent.  It  appears  that  the  cost  of  " prospecting"  " exploration," 
and  " development"  (whatever  they  may  separately  mean)  amounts  to 
some  37  per  cent,  of  the  total  cost  of  "  operation." 

KERR  LAKE  MINING  COMPANY 

For  the  year  ending  August  31,  1908,  this  company  showed  the 
following  record : 

Tons  mined,  528;  ounces  silver,  1,473,712;  ounces  per  ton,  2790. 


Costs 

Production  and  development 

$139  530 

Per  ton 

$264  25 

Per  ounce 

$0  0947 

Shipping  and  smelting 

76  093 

144  30 

0  0516 

General  expense  

32  904 

62  30 

0  0223 

Plant  and  machinery 

57419 

108  75 

0  0390 

Total $305,946 


$579.44    $0.2076 


This  is  probably  a  new  record  for  high  costs  per  ton,  yet  silver  was 
produced  for  less  than  21  cents  per  ounce  and  the  profit  was  nearly 
70  per  cent,  of  the  gross  value. 

Not  all  of  the  Cobalt  ores  are  of  such  high  grade,  several  of  the  mines 
being  now  equipped  with  mills  for  concentrating,  but  the  mills  only 
handle  a  small  tonnage  and  it  is  safe  to  say  that  if  Cobalt  had  to  depend 
on  the  low-grade  ores  it  would  never  have  been  heard  of. 

The  Kerr  Lake  in  1918  had  the  following  record  which  illustrates  I 
suppose  the  changes  that  have  taken  place  in  10  years.  About  2,583,000 
ounces  of  silver  were  taken  from  48,542  tons  of  rock  hoisted. 


The  costs  were 

Mining   

Per  ton  rock 

5.11 

Per  ounce 
silver,  cents 

9.6 

Treatment  etc               

3.34 

1.0 

General 

0.50 

2.3 

Outside  explorations 

1.24 

2.3 

Taxes                                           

4.70 

9.0 

Total  about 14.89  28.1 

Mining  Cost  per  Ton  of  Rock  Hoisted — September  1,  1917,  to  August  31,  1918 


Tons  rock  hoisted,  48,542 


Ore 

43,129  tons 


Mine  waste 
5,413  tons 


Sacking  ore,  1st  Grade 

No.  1  Ag.  Co 

No.  2  Ag.  Co 


400  tons 

610  tons 

7  tons 


Mill  ore. . . 27,835  tons 


28,852  tons 
Waste  from  bumping  table 14,277  tons 


The  following  were  the  costs:  Total 43,129  tons 

48,542  tons  rook  hoisted  at  a  mining  cost  of $5. 11  per  ton 

2,582,992 . 82  ounces  silver  at  a  mining  cost  of 9 . 6  c.  per  ounce 


512 


THE  COST  OF  MINING 


Operating  and  Profit  and  Loss  Account— For  the  Year  Ended  August  31st,  1918 


Cost    of    production    and 
development: 

Stoping $25,515.52 

Development 24,946 . 05 

Power,  light  and  heat. ..  25,658.51 

Ore  sorting  and  jigging  . .  15,725. 75 

Tramming 29,152.96 

Hoisting 7,023.18 

Timbering 22,224 . 75 

Pumping 2,809.55 

Mine  expense 13,961.70 

Sampling  and  assaying. .  5,062.82 


Proceeds    of    ore 


$2,122,951.04 


Less: 

Ore  on  hand,  at 
smelters,  and  in 
transit,  August 
31st,  1917  (es- 
timated)   


335,141.04 


$1,787,810.00 


6,652.67 

1,735.59 

Repairs  to  plant  and 

3,259.64 

Surface  maintenance  
Stable  expense  
Boarding  house  expense.  . 
Insurance  
Timber  berth... 

10,475.99 
6,150.17 
1,698.15 
2,361.44 
2,090.90 

Plus: 

Ore  on  hand,  at 
smelters,  and  in 
transit  August 
31st,  1918  (es- 
mated) 


549,335.67  $2,337,145.67 


Taxes 27,632.72    $247,847.07      Interest. 

Shipment,   treatment   and 

other  charges: 

Shipment  expense $4,228 . 32 

Milling 8,747.15 

Freight 14,043.52 

Ore  treatment 110,017 . 85 

Assaying  and  sampling  . .  4,941,89 

Insurance 19,950.30      161,929.03 

Administration  and  general 

expenses: 

Directors'  fees $620 . 00 

Donation  to  Red  Cross . . .  5,000 . 00 

General  expense 9,596.11 

Compensation  of  manager 

and  engineers 8,899 . 99 

Travelling  expense 243 . 20 


57,073.69 


24,359.30 


Expenses     in     connection 

with  lake  draining  and 

exploration  of  outside 

properties 

Estimated  for  taxes 

Balance,  being  profit  transferred  to  bal- 
ance sheet 


60,270.42 
227,496.90 

1,672,316.64 
$2,394,219.36 


$2,394,219.3 


TINTIC  DISTRICT 

A  conspicuous  example  of  several  important  features  of  the  mining 
industry  is  afforded  by  the  Tintic  district  of  Utah,  situated  about  90 
miles  south  of  Salt  Lake  City.  Perhaps  it  should  always  have  been 
described  as  a  silver  mining  camp  but  during  the  low  prices  for  that  metal 
considerable  attention  was  paid  to  the  copper,  lead  and  gold  which  the 
ores  also  contain. 

A  great  series  of  quartzites,  limestones  and  shales  of  Paleozoic  age 
forms  a  mountain  ridge  known  as  the  Oquirrh  Range,  the  summits  of  which 


SILVER  MINING  AT  COBALT  AND  GUANAJUATO  513 

rise  to  heights  of  about  8000  ft.  Toward  the  east  the  ground  slopes  down 
regularly  toward  Utah  Lake,  which  is  the  southward  continuation  of  the 
Great  Salt  Lake  valley  and  lies  with  an  elevation  of  only  4400  ft.  at  the 
foot  of  the  abrupt  and  imposing  uplift  of  the  Wahsatch;  toward  the  west 
there  is  a  desert  valley  the  elevation  of  which  is  about  6000  above  sea 
level.  The  crest  of  the  range  is  a  great  syncline,  the  western  side  of 
which  stands  nearly  verical;  but  the  east  side  dips  rather  gently  toward 
the  west.  This  syncline  is  broken  by  two  intrusive  masses  each  of  which 
occupies  a  roughly,  quadrangular  section  across  nearly  the  whole  range. 
Of  these  the  southerly  one  is  a  granitic  batholith  which  contains  within 
its  body  a  number  of  productive  fissure  veins;  the  northerly  one  is  a 
funnel  shaped  mass  of  rhyolite  apparently  spread  out  like  a  mushroom 
at  the  top.  It  is  quite  unmineralized.  Between  these  two  masses  the 
great  syncline  of  limestone  contains  numerous  tortuous  channels  of  ore 
which  must  have  emanated  at  greater  depth  from  the  monzonite  magma. 
There  is  nothing  impossible  in  the  supposition  that  the  rhyolite  also  may 
be  a  superficial  phase  of  an  offshoot  from  the  same  magma.  The  mon- 
zonite mass  has  produced  a  good  deal  of  contact  metamorphism,  turning 
a  fringe  of  the  limestones  into  marble,  but  the  rhyolite  has  not  affected 
them  noticeably.  The  eruptive  masses  hold  water  at,  or  near,  the  sur- 
face; the  intervening  or  underlying  limestones  were  thoroughly  drained 
by  nature  almost  down  to  the  level  of  Utah  Lake,  and  the  ores  oxidized 
to  that  depth,  that  is  to  say,  to  an  average  of  not  less  than  2000  feet  below 
the  surface. 

Up  to  the  end  of  1917  this  mass  of  limestone  partially  explored  down 
to,  say,  2000  ft.,  had  produced  ores  containing  a  gross  value  of  $170,000- 
000  from  an  area  of  2200  acres.  I  suppose  the  tonnage  shipped  must 
have  been  about  7,000,000.  The  mass  of  limestone  would  weigh  about 
2200  times  as  much  as  the  ore  that  has  come  from  it.  How  much  more 
it  may  contain  is  of  course  unknown,  but  there  certainly  would  be  nothing 
startling  in  supposing  that  such  a  proportion  of  ore  might  be  increased. 
The  output  of  the  district  shows  little  signs  of  falling  off,  if  any,  but  the 
principal  locus  of  extraction  varies  from  time  to  time  as  discoveries 
are  made.  The  profits  of  such  mines  as  have  paid  at  all  have  been  a 
scant  20  per  cent,  of  the  gross  value  of  the  metals  shipped  by  them. 

CHIEF  CONSOLIDATED 

For  some  years  this  mine  has  been  the  largest  producer  of  the  district. 
It  occupies  a  large  part  of  the  northern  portion  of  the  productive  area. 
This  land  was,  in  the  earlier  life  of  the  camp,  thought  to  be  entirely 
unmineralized  because  the  surface  is  occupied  by  the  barren  rhyolite 
that  was  mentioned  above.  But  below  these  volcanics  the  limestones 
are  mineralized  to  an  unknown  distance  northward,  Acting  on  this 
knowledge  the  company  has  acquired  lands  in  that  direction  until  it  has 

33 


514  THE  COST  OF  MINING 

expanded  its  holdings  from  about  100  acres  in  1909  to  about  5000  acres 
at  present.  The  output  in  eight  years  up  to  the  end  of  1917  was  323,803 
tons  with  a  gross  value  at  average  prices  of  about  $7,500,000  as  follows : 

Gold  0.13  oz.  at  $20.67 $2.68 

Silver  22.4  oz.  at  0.60 13.44 

Lead  151  pounds  at  0.045  cents 6. 75 

Copper  1.1  pounds  at  0. 15  cents 0. 16 

Zinc  7 . 0  pounds  at    0 . 55  cents 0 . 38 

Total $23.41 

Less  smelter  costs  and  deductions  about 11 . 41 

Average  net  value  at  the  mine 12 . 00 

Cost  of  equipment  mining  and  development 6 . 60 


Mining  profit $5 . 40 

But  a  policy  of  constantly  buying  more  property  in  order  to  provide 

opportunity  to  open  up  ore  has  cost  something  like  $1.00  a  ton  additional, 

even  estimating  that  the  ground  thus  secured  will  eventually  yield  several 

times  the  tonnage  already  produced;  so  that  the  actual  net  profits  can 

hardly  average  more  than  about  $4.40. 

These  were  oxidized  ores,  occurring  in  long  tortuous  channels  through 

the  limestone.     The  mineralization  consists  principally  of  quartz,  with 

lead,  silver  etc.,  scattered  irregularly  through  it. 

But  on  reaching  the  water  level  at  about  1800  feet  depth  a  different 

grade  of  ore  was  encountered.     This  is  shown  by  the  report  for  1918. 

The  ore  is  now  a  sulphide,  presumably  somewhat  enriched  in  silver. 

Gold0.68oz.  at  $20.67 $1.40 

Silver  39.7oz.  at  0.986 39.15 

Lead  111  pounds  at  0.07 7.77 


Total $48.32 

Smelter  deductions 14 . 82 

Net  to  mine 33 . 50 

Cost  of  mining,  development  and  equipment 17. 17 

Mining  profit 16 . 33 

It  will  be  observed  that  the  costs  are  enormously  higher  than  before. 
This  is  explained  by  the  fact  that  when  earnings  are  large  a  proportion- 
ately larger  sum  is  spent  on  development  and  improvements.  Besides 
this  additional  cost  is  incurred  in  pumping.  But  of  course  the  main 
cause  of  the  rise  was  the  general  war  inflation.  In  this  mine  it  has  re- 
quired on  the  average  1  foot  of  development  work  for  4  tons  extracted. 

GUANAJUATO,  MEXICO,  1908 

Guanajuato  has  the  reputation  of  having  been  the  most  productive 
silver-mining  district  in  the  world;  its  total  output  exceeding  one  thou- 
sand million  ounces.  It  is  the  very  reverse  of  the  Cobalt  district  in 


SILVER  MINING  AT  COBALT  AND  GUANAJUATO  515 

geological  structure,  ore  deposits,  and  methods.  The  rocks,  instead  of 
belonging  to  the  ancient  Algonkian  series,  belong  to  the  comparatively 
recent  Cretaceous.  Instead  of  the  multitude  of  small  veins  there  are 
four  or  five  very  large  fault  fissures  carrying  a  strong  mineralization  of 
quartz  and  silver  sulphides.  The  mining  methods,  instead  of  depending 
on  the  careful  sorting  of  small  streaks  of  rich  smelting  ore,  are  designed 
to  extract  large  quantities,  and  finally,  the  treatment,  instead  of  being 
smelting  as  at  Cobalt,  is  confined  almost  entirely  to  cyaniding.  In  the 
early  days  (and  by  early  days  I  mean  the  period  of  more  than  two  hun- 
dred and  fifty  years  following  1550,  during  which  an  occasional  bonanza 
was  discovered)  it  is  probable  that  Guanajuato  bore  a  much  closer  resem- 
blance to  Cobalt  than  it  does  to-day.  It  is  likely  that  a  very  large  amount 
of  high-grade  ore  was  then  mined  and  that  the  lower-grade  ores  of  the 
present  day  have  become  valuable  more  because  the  rich  ores  of  former 
times  are  no  longer  to  be  had  than  for  any  other  reason.  In  other  words 
it  is  probable  that  if  the  high-grade  ores  of  former. times  were  now  avail- 
able the  ores  being  mined  at  present  would  not  excite  much  attention. 
It  has  often  been  remarked  that  Guanajuato  bears  a  close  resemblance  to 
the  Comstock  lode  in  Nevada,  and  its  history  has  been  similar;  but  its 
life  has  been  longer  and  its  output  greater.  The  longer  life  of  the  Mexican 
camp  has  been  chiefly  due  to  the  fact  that  until  recently  it  has  not  been 
worked  with  American  appliances  and  energy,  the  result  being  that  at 
Guanajuato,  after  a  life  of  three  hundred  and  fifty  years,  the  deepest 
mines  have  reached  a  depth  of  only  2000  ft.,  while  on  the  Comstock  lode 
explorations  reached  a  depth  of  over  3000  ft.  within  thirty  years  after 
the  first  discovery. 

The  present  mining  activity  of  Guanajuato  is  chiefly  in  the  hands 
of  Americans  and  is  extremely  recent,  dating  back  only  to  1904  when  it 
was  first  satisfactorily  demonstrated  that  the  ores  could  be  economically 
worked  by  the  cyanide  process.  Since  that  time  the  output  of  the  camp 
has  increased  very  rapidly.  It  has  now  reached  an  annual  output  of 
about  ten  million  ounces,  divided  among  some  eight  or  ten  producing 
mines.  The  average  ore  is  probably  worth  some  $7  or  $8  per  ton,  the 
values  consisting  of  about  13  oz.  of  silver  and  0.05  oz.  of  an  ounce  of  gold. 

The  economics  of  the  districts  are  somewhat  as  follows:  Labor  is 
very  cheap  and  just  as  poor  as  it  is  cheap;  miners  earning  from  $1  a  day 
down.  There  is  no  evidence  here  any  more  than  in  India  or  South 
Africa  that  low  wages  means  cheap  operating.  Water-generated  electric 
power  has  been  brought  into  the  district  by  American  enterprise  from  a 
distance  of  some  110  miles.  This  power  was  first  used  by  the  mines  in 
1905  and  its  introduction  proved  a  great  advantage  and  has  much  to  do 
with  the  success  of  the  mining  enterprises.  Electric  power  is  sold  at  $75 
per  horse-power  per  year,  which  is  a  very  moderate  price;  before  its  in- 
troduction steam  power  cost  some  $200  a  year. 


516 


THE  COST  OF  MINING 


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SILVER  MINING  AT  COBALT  AND  GUANAJUATO  517 

A  number  of  good  mills  have  been  built  and  are  now  operating  in  the 
district,  the  results  of  which  are  given  in  an  accompanying  table.  It 
will  be  seen  that  the  operating  costs  vary  from  $1.62  per  ton  for  a  mill  of 
the  capacity  of  400  tons  a  day  to  $2.50  a  ton  for  one  having  a  capacity  of 
only  50  tons. 

I  have  found  the  plant  expenditures  stated  for  only  one  mine — the 
Pinguico — at  which  the  total  cost  for  plant  and  equipment,  including 
mill,  mill  site,  storehouse,  supplies,  etc.,  was  $680,000,  providing  for  a 
treatment  capacity  of  some  80,000  tons  a  year.  If  this  mine  may  be 
taken  as  an  average  for  the  district,  we  may  calculate  that  the  plant 
costs  somewhere  around  $8.50  per  ton  of  annual  output.  Since  there  is 
every  reason  to  believe  that  these  mines  will  be  fairly  long-lived,  it  seems 
rational  to  amortize  the  capital  over  a  period  of  fifteen  years  so  that  in 
round  numbers  the  capital  employed  is  worth  10  per  cent.,  or  $0.85  per 
ton.  Calculating  the  usual  amount  for  depreciation,  6  per  cent.,  we  get 
51  cents  a  ton  for  this  item.  It  is  stated  that  mining  costs  in  the  princi- 
pal mines  are  about  $2.25  per  ton. 

The  entire  minimum  cost  of  operating  at  Guanajuato  may  be  tabu- 
lated as  follows: 

Mining $2 . 25 

Milling 1.60 

Amortization ' 0 . 85 

Depreciation 0.51 

Total $5.21 

With  an  extraction  of  85  per  cent,  these  costs  mean  that  the  minimum 
grade  ore  that  can  be  handled  must  have  an  assay  value  of  some  $6.50 
per  ton,  which  means  in  round  numbers  some  10  oz.  in  silver  and  $1  per 
ton  in  gold. 

The  higher  grade  ores,  as  in  other  districts,  are  more  costly.  The 
Pinguico  mine  in  1908  produced  82,750  tons  of  ore  worth  $1,088,000  or 
$13.16  a  ton.  The  profits  were  $425,705,  or  a  trifle  over  $5.14  a  ton,  so 
that  the  total  costs  were  $8.02.  The  extraction  is  stated  to  be  85.56 
per  cent,  of  the  gross  value  of  the  ore.  In  this  case,  therefore,  the 
minimum  value  that  will  stand  working  is  in  the  neighborhood  of  $10  a 
ton. 

It  seems  that  up  to  the  present  the  profits  of  the  Guanajuato  mines 
have  been  very  moderate.  Pinguico,  just  mentioned,  is  probably  the 
most  prosperous.  It  produced  silver  in  1908  at  an  approximate  cost  of 
35  cents  an  ounce.  It  is  probable  that  for  the  district  at  large  the  present 
cost  of  silver  is  approximately  50  cents  an  ounce  against  27  cents  at 
Cobalt. 

Note  in  1919. — The  effort  to  renew  operations  on  a  large  scale  at 
Guanajuato  did  not  prove  very  successful. 


518 


THE  COST  OF  MINING 


EARLY  OUTPUT  OF  TOMBSTONE 

It  seems  that  three  authorities  are  available  on  the  first  stage  of 
Tombstone's  mining  history:  W.  P.  Blake,  a  well-known  mining  engineer, 
who  seems  to  have  been  familiar  with  the  camp  in  its  earliest  days,  having 
written  a  paper  on  it  for  the  Transactions  of  American  Institute  of 
Mining  Engineers  (Vol.  X,  1882),  and  later  a  report  for  the  Development 
Company  of  America,  dated  July  28,  1902;  John  A.  Church,  who  was 
another  mining  engineer  of  high  standing,  General  Manager  of  the  Tomb- 
stone Mill  &  Mining  Company  in  its  early  days,  later  acting  as  consulting 
engineer  for  the  Tombstone  Consolidated  Mines  Company,  and  who 
wrote  an  article  on  the  district  for  the  Transactions  of  American  Insti- 
tute of  Mining  Engineers,  1903;  and  W.  F.  Staunton,  who  was  superin- 
tendent of  the  Tombstone  Mill  &  Mining  Company  for  eleven  years  up 
to  the  time  of  its  closing  down  in  1894,  and  who  wrote  two  reports  on  the 
district:  one  in  1894,  and  the  second  June  29,  1901,  addressed  to  Mr. 
Geo.  A.  Beaton,  of  New  York.  It  is  evident  from  the  remarks  in  these 
various  papers  that  these  gentlemen  were  well  acquainted  with  one 
another.  Blake's  statistics,  other  than  those  given  in  his  first  paper  in 
the  Transactions,  quotes  Mr.  Staunton  and  Mr.  Church  as  authorities  and 
gives  statistics  from  the  records  of  the  Tombstone  Mill  &  Mining  Com- 
pany, with  which  both  these  men  had  been  connected.  I  cite  this  to  show 
that  the  figures  given  by  these  authorities  all  appear  to  have  come  from 
the  same  source,  and  that  their  latest  reports  were  written  about  the 
same  time  and  cover  about  the  same  ground.  No  two  of  the  three,  how- 
ever, give  exactly  the  same  details,  although  they  agree  pretty  well  on 
the  total  production.  From  them  all  I  get  the  following  figures: 

Church  says  the  entire  yield  of  Tombstone  up  to  1902  was : 

Gold  163,000  ounces,  Silver  21,500,000  ounces,  Lead  5,000  tons. 
He  assumes  that  to  get  the  gross  content  of  the  ore  it  would  be  fair  to 
add  about  15  per  cent,  to  this. 

He  also  states  that  the  output  of  the  Tombstone  Mill  &  Mining  Com- 
pany from  June,  1879  to  December,  1893,  which  I  believe  covers  almost 
its  entire  history,  was: 

Gold  37,676  ounces,  Silver  6,707,158  ounces. 

From  Blake's  report  I  get  the  following  figures  and  deductions  for  the 
same  company. 

From  June,  1879  to  March,  1884: 


Tons 

Gold,  oz. 

Silver,  oz. 

Lead,  tons 

Average  silver, 
ounces 

91,086 

10,931 

3,459,554 

777 

38 

From  March,  1888  to  June  30,  1893,  all  shipped  to  smelters: 


SILVER  MINING  AT  COBALT  AND  GUANAJUATO 


519 


Tons 

Gold,  oz. 

Silver,  oz. 

Lead,  tons 

Average  silver, 
ounces 

1889 

3,885 

3,009 

187,023 

76 

1890 

3,232 

2,166 

177,260 

82 

3891 

3,891 

3,339 

239,801 

293 

1892 

7,028 

4,207 

460,506 

631 

1893 

8,452 

2,950 

392,165 

603 

26,518 

15,671 

1,456,756 

1,685 

55 

By  adding  the  detailed  productions  together  and  subtracting  them  from 
the  total  output  given  by  Church,  we  may  deduce  that  from  March, 
1884,  to  March,  1888,  four  years  for  which  there  are  not  details,  there 
must  have  been  produced  by  the  Tombstone  Mill  &  Mining  Company 
about — 


Lead,  tons 


Average  silver, 
ounces 


Tons  Gold,  oz.  Silver,  oz. 

70,000  11,074  1,790,840  25 

The  tonnage  for  these  years  is  not  stated  but  as  at  the  end  of  the  first 
period  milling  was  going  on  regularly  at  the  rate  of  about  17,500  tons  a 
year,  we  may  guess  the  tonnage  to  be  about  70,000. 

These  figures  are  for  the  Lucky  Cuss,  West  Side-Sulphuret,  North- 
west, Toughnut  and  Charleston  Mines. 

It  is  very  noticeable  that  in  the  five  last  years  the  tonnage  had 
dwindled  but  that  the  grade  had  risen.  One  may  surmise  that  about 
1887  it  had  been  decided  not  to  attempt  to  keep  the  mill  going  but  to 
ship  such  ore  as  would  pay  to  the  smelters.  To  sum  up,  we  may  suppose 
that  the  total  tonnage  of  this  concern  was  somewhere  around  187,000, 
and  that  the  grand  average  of  the  ore  was  about  $4  gold  and  35  ounces 
silver.  Under  the  prices  ruling  in  those  times  the  gross  receipts  were 
about  $8,000,000  or  no  less  than  $43  a  ton.  But  the  dividends  paid  were 
only  $1,500,000  or  $8  a  ton.  It  is  stated  that  total  profits  were  about 
$2,000,000,  the  difference  having  been  paid  for  additional  property. 
Even  at  this,  the  profits  were  only  $11  a  ton  and  the  costs  $32  a  ton. 
Mr.  Staunton  states  that  at  the  beginning  the  cost  of  mining,  milling, 
freight  to  mill,  etc.,  was  $27.42  a  ton  and  the  lowest  ever  obtained  was 
$12.90.  We  might  suppose  from  this  that  the  cost  averaged  about  $20, 
but  this  included  only  the  "practical"  cost  of  operating  and  no  doubt  did 
not  include  such  items  as  freight  and  treatment  on  ores  shipped,  or 
general  expenses  in  which  there  may  have  been  considerable  for  litigation. 
Although  $12  a  ton  seems  an  enormous  amount  for  such  costs,  the  sum 
total  $2,200,000  is  not  incredible  when  we  consider  that  it  was  spread 
over  a  period  of  15  years.  It  would  have  averaged  about  $12,000  a 
month.  At  any  rate,  such  were  the  dividends  earned  and  such  must  have 
been  the  costs,  no  matter  how  they  are  to  be  explained. 

The  other  dividend-paying  mines  of  the  district  were  the  Contention 


520  THE  COST  OF  MINING 

and  Grand  Central,  both  working  on  one  vein.  They  are  vaguely 
credited  with  a  total  of  $4,750,000  in  dividends.  The  gross  output  of 
these  mines  is'given  at  about  $13,000,000.  The  total  tonnage  is  unknown 
but  in  1882  the  Contention  mined  25,017  tons  from  which  bullion  worth 
$1,676,705.96  was  realized,  an  average  saving  of  $67  a  ton.  Since  both 
these  mines  came  to  an  abrupt  end  about  1886  and  since  the  milling 
capacity  does  not  seem  to  have  been  greater  than  90  tons  a  day  for  either 
mine,  it  is  hard  to  see  from  the  figures  how  the  total  tonnage  produced 
could  have  risen  even  as  high  as  300,000  and  it  is  a  fair  inference  that  the 
average  ore  produced  from  those  mines  certainly  averaged  over  $40  and 
probably  over  $50  a  ton.  It  is  reported  that  the  total  output  of  the 
Contention  up  to  1887  was  $6,034,000.  Of  this  $4,380,000  were  produced 
before  1883,  leaving  only  $1,700,000  for  the  production  of  the  four  succeed- 
ing years.  From  these  facts,  if  they  are  facts,  we  may  draw  several 
inferences : 

1.  More  than  three-quarters  of  the  value  from  the  Contention  mine 
came  from  ore  yielding  around  $70  a  ton. 

2.  If  the  remaining  ore  ran  only  $30  a  ton,  the  grand  average  must 
have  been  over  $50. 

3.  According  to  these  figures,  the  total  tonnage  would  be  not  over 
120,000,  the  dividends  paid  (total  $2,750,000)  would  be  about  $23,  and 
the  costs  $27  a  ton. 

4.  The  mine  declined  abruptly  years  before  the  water  situation  be- 
came acute,  therefore  not  from  encountering  the  water,  but  because  a 
body  of  rich  ore  came  to  an  end.     Mr.  Staunton  says  the  pumps  were 
stopped  at  the  time  of  the  fire  which  destroyed  the  Grand  Central 
works,  May,  1886;  therefore,  in  three  years  and  five  months  following 
1883  the  total  production  was  no  greater  than  it  had  been  in  that  single 
year. 

5.  'The  Grand  Central  mine  came  to  a  practical  end  about  1886,  hav- 
ing produced  in  four  years  and  four  months  somewhere  around  $6,000,000 
from  a  total  tonnage  probably  not  exceeding  130,000,  thus  averaging 
probably  $45  or  more  per  ton. 

6.  Out  of  a  total  tonnage  of  150,000,  more  or  less,  its  dividends  were 
only  $2,000,000,  or  less  than  $14  a  ton,  and  its  total  costs  must  have  been 
more  than  $30  a  ton. 

7.  That  in  both  mines  such  costs  could  only  have  been  caused  by 
mining  small  bodies  of  high-grade  ore  which  could  be  opened  up  only  by 
an  enormous  amount  of  development  work. 

It  seems  to  me  we  may  fairly  believe  that  the  broad  facts  in  regard  to 
the  few  prosperous  years  of  Tombstone  are  that  the  three  properties 
just  mentioned  produced  altogether  about  $21,000,000  gross  and  $6,- 
250,000  in  dividends— all  the  dividends  paid  in  the  district;  that  their 
gross  output  was  over  80  per  cent,  of  that  of  the  whgte  district;  that 


SILVER  MINING  AT  COBALT  AND  GUANAJUATO  521 

their  total  tonnage  was  around  460,000;  that  the  average  grade  of  the 
ore  under  prices  then  ruling  was  between  $45  and  $50  a  ton,  averaging 
nearly  $6  in  gold  and  $40  in  silver  (about  38  ounces) ;  that  if  the  same  ore 
had  been  mined  under  the  average  prices  of  the  past  15  years,  say  57  cents 
an  ounce  for  silver,  the  average  grade  of  the  ore  would  have  been  only 
$27.60  per  ton,  and  that  under  the  costs  actually  obtained  by  those 
companies  there  would  have  been  no  profits  at  all. 

TOMBSTONE   CONSOLIDATED   MINES  COMPANY 

It  appears  further  that  while  the  prosperous  days  of  the  camp  ended 
about  1886,  several  of  the  mines,  like  the  Tombstone  Mill  &  Mining 
Company,  continued  operating  on  a  reduced  scale  until  the  panic  of 
1893.  The  latter  company  finally  closed  down  in  1894.  During  the 
period  of  general  low  prices,  1893  to  1899,  the  camp  was  probably  almost 
deserted.  A  revival  of  optimism  about  the  district  accompanied  the 
industrial  boom  of  1899  and  the  years  following.  The  properties  men- 
tioned above,  perhaps  together  with  some  others,  were  consolidated  into 
the  Tombstone  Consolidated  Mines  Company  and  a  comprehensive 
scheme  of  exploration  was  undertaken,  directly  mainly  toward  pursuing 
the  orebodies  below  the  water  level.  Messrs.  Blake,  Church  and  Staun- 
ton  were  employed  as  consulting  engineers,  so  that  full  advantage  was 
taken  of  the  long  experience  of  those  gentlemen  with  the  earlier  and 
more  prosperous  days.  It  may  be  well  to  mention  that  it  was  part  of 
the  theory  of  the  new  company  that  large  economies  would  result  from  a 
combined  ownership. 


INDEX 


Actual  costs,  coal  mining,  94 
Agassiz,  A.,  172,  245 
Ahmeek,  229 
costs,  229 
output,  229 

underground  work,  230 
Alaska  Mexican  Gold  Mining  Co.,  462 
Alaska  Treadwell  Gold  Mining  Co.,  50, 

54,  461 

Alaska  United  Gold  Mining  Co.,  462 
Allen,  R.  C.,  127,  429 
Allocation  of  iron  and  coal,  115 
Allouez  Mining  Co.,  231 
costs,  231 
output,  231 

underground  work,  231 
Altitude,  49 

orebody,  51 

American  and  Mexican  methods,  199 
American  Smelting  &  Refining  Co.,  405 
American  Smelters  Securities  Co.,  57 
Amortization,  63,  64,  66 

tables,  66 
Anaconda  Copper  Mining  Co.,  28,  49, 

155,  316 
costs,  175 

Annual  dividend,  present  value  of,  67 
Anthracite  mining,  100,  102 
Arizona,  American  methods,  199 
Bisbee,  246 

Calumet  &  Arizona,  256,  258 
Clifton  Morenci  district,  292 
Copper  Queen,  246 
Detroit  Copper  Mining  Co.,  266 
Douglas,  smelting  at,  263 
ethnology,  198 
Jerome,  201 
belt  rocks,  203 
dioritic  dikes,  210 
formation  of  deposits,  206,  207 
geologic  facts  and  deductions,  216 
greenstones,  209 
mineralized  area,  211 
quartz  porphyries,  209 
structural  features,  208 
unconformities,  202 
volcanic  activity,  206 


Arizona,  Mexican  methods,  199 

Northern  plateau,  192 
-    population,  198 

Superior  &  Pittsburg,  258 
Arizona  Commercial,  248 
Arizona  Copper  Co.,  293 
Austin,  L.  S.,  226 
Automatic  handling  of  ore,  iron  mining, 

155 

Average  costs,  17 
Average  prices,  16 

Balaklala  Consolidated  Copper  Co.,  335 

Baltic  lode,  235 

Baraga  Co.,  Mich.,  iron  mining  costs,  134 

Beaton,  G.  A.,  518 

Bingham  &  Garfield  Ry.  Co.,  305 

Bisbee,  248 

Calumet  &  Arizona,  256,  258 

Copper  Queen,  246 

Superior  &  Pittsburg,  258 
Blake,  W.  P.,  518 
Blast  furnaces,  iron,  capital   employed, 

144 

Bonanza  earnings,  38 
Borrowed  capital,  39 
Boulder  batholith,  315 
Bradley,  F.  W.,  272 
Broken  Hill  Proprietary,  395 
Browne,  R.  E.,  32,  48,  59,  478 
Brush,  E.,  407 
Bunker  Hill  &  Sullivan,  381 
Butte  &  Superior,  432 
Butte  batholith,  315 

Calumet  &  Arizona,  256,  258 

development  companies,  259 

early  history,  259 

later  history,  260 

production,  261 
Calumet  &  Hecla,  49,  172,  226,  241,  242 

costs,  243 

dividends,  244 

output,  244 
Cambrian    and  Ordovician  occurrences, 

362 
Campbell,  M.  R.,  75,  80,  81,  89 


523 


524 


INDEX 


Camp  Bird,  51,  465 
Capital,  borrowed,  39 
Capital  charges,  97 

Capital  employed,  copper  smelting,  186 
iron  mines,  142 
blast  furnaces,  144 
coal  and  coke  properties,  143 
inventory,  144 
summary,  144 
surplus,  144 
transportation,  143 
Capital  vs.  present  value,  43 
Capital,  nature  and  use  of,  31 
Carnegie  Steel  Co.,  60 
Causes  of  loss,  54 
Champion  Copper  Co.,  238 
Chance,  H.  M.,  103 
Chief  Consolidated,  28,  513 
Chino  Copper  Co.,  286 
Church,  J.  A.,  518 
Clark,  W.  A.,  317 
Clr&on  Morenci  district,  292 
Cliniate,  49 
Coal,  71 

Allocation  of,  115,  116 
capital  employed,  143 
fields,  .Mesozoic,  79 
Paleozoic,  78 
Tertiary,  81 
United  States,  91 
mining,  capital  charges,  97 
costs,  92 
Illinois,  100 
labor  and  wages,  93 
thickness  of  seam,  103 
Virginia,  99 
West  Virginia,  109 
new  capital,  107 
waste,  105 

price  at  mines,  88,  94 
production  statistics,  9,  81,  84,  85 
reserves,  91 
statistics,  81 
thickness  of  bed,  109 
total  production  in  U.  S.,  89 
value  at  mine,  88,  94 
world's  production,  84 
Coke,  capital  employed,  143 

manufacture,  100 
cost,  101,  155 

Virginia,  101 
Cole,  T.  F.,  259 
Colorado  Fuel  &  Iron  Co.,  98 


Completion,  time  for,  34 

Concentration  mills,  Lake  Superior  copper 

mines,  225 
Conglomerate  lode,    Calumet   &   Hecla, 

246 

Connelsville,  coking  costs,  101 
Consolidated  Interstate  Callahan,  435 
Copper,  costs,  Ahmeek,  229 

Anaconda,  175,  321,  322 

Arizona  Commercial,  348 

Arizona  Copper,  293 

Balaklala  Consolidated,  336 

Boston  &  Montana,  322 

Butte  &  Boston,  322 

Butte  Coalition,  323 

Calumet  &  Arizona,  257 

Calumet  &  Hecla,  321 

Copper  Queen,  270 

Copper  Range  mines,  236 

Detroit  Copper,  295 

disseminated  ores,  172 

Granby  Consolidated,  323 

Greene  Cananea,  343 

Isle  Royal,  232 

Moctezuma,  265,  268 

Mt.  Lyell,  333 

Nevada  Consolidated,  297 

North  Butte,  323 

Old  Dominion,  346 

Osceola  Consolidated,  233 

Shannon,  293 

smelting,  226 

Tamarack,  241 

Tennessee  Copper,  323 

Utah  Consolidated,  330 

Utah  Copper  Co.,  299,  301 

Wallaroo  &  Moonta,  345 

Wolverine  mine,  227 
disseminated  ores,  171 
mines,  Ahmeek,  229 

Allouez,  231 

Anaconda,  316 

Arizona  Commercial,  348 

Arizona  Copper,  293 

Balaklala  Consolidated,  335 

Baltic  Lode,  235 

Boston  &  Montana,  322 

Butte  &  Boston,  322 

Butte  Coalition,  323 

Calumet  &  Arizona,  257' 

Calumet  &  Hecla,  225,  241,  321 

Champion,  238 

Chino,  286 


INDEX 


525 


Copper  mines,  Copper  Queen,  270 

Copper  Range,  236 

Copper  Range  Consolidated,  226 

Detroit  Copper,  266 

Granby  Consolidated,  323 

Greene-Cananea,  337 

Inspiration  Consolidated,  306 

Isle  Royal,  232 

Lake  Superior  mines,  221 

Mayer,  218 

Miami,  280,  284 

Michigan  Smelting  Co.,  225 

Moctezuma,  265,  267 

Mohawk  Mining  Co.,  225 

Mt.  Lyell,  332 

Nevada  Consolidated,  297 

Northern  California  mines,  333 

North  Butte,  323 

Old  Dominion,  345 

Osceola  Consolidated,  233 

Quincy,  225 

Ray  Consolidated,  287 

Shannon,  293 

Superior  &  Pittsburg,  258 

Tamarack,  241 

Tennessee  Copper  Co.,  328 

Trimountain,  239 

United  Verde,  49,  209 

United  Verde  Extension,  29,  41, 
211,  215 

Utah  Consolidated,  329 

Utah  Copper,  299,  301 

Wallaroo  &  Moonta,  344 

Wolverine,  225 
mining  at  Butte,  320 
Northwestern  field,  311 
occurrence,  171 
ores  smelted,  187 
outlook  in  1919,  179 
porphyries,  271 
prices,  13,  179 

production  statistics,  9,  171,  190 
prospects,  171 
quartz  pyrite  ores,  174 

costs,  174 
smelting,  capital  invested,  186 

costs,  226 

ores,  177 

Southwest  field,  189 
treatment  at  Butte,  320 
world's  production,  180,  181 
Copper  Queen  Consolidated  Mining  Co., 
28,  246,  259,  264,  269 


Copper  Range  Consolidated,  224,  226 
Copper  Range  mines,  236 
costs,  237 
dividends,  238 
output,  237 
Costs,  actual,  coal,  94 
average,  17 
coal,  actual,  94 

mining,  92 
Illinois,  100 
Virginia,  99 
West  Virginia,  109 

thickness  of  seam,  103 
coke,  155 
complete,  62 
copper,  Ahmeek,  229  • 

Anaconda,  175,  321,  322 

Arizona  Commercial,  348 

Arizona  Copper,  293 

Balaklala  Consolidated,  336 

Boston  &  Montana,  322 

Butte  &  Boston,  322 

Butte  Coalition,  323 

Calumet  &  Arizona,  257 

Calumet  &  Hecla,  321 

Copper  Queen,  270 

Copper  Range  mines,  236 

Detroit  Copper,  295 

disseminated  ores,  171 

Granby  Consolidated,  323 

Greene  Cananea,  343 

Isle  Royal,  232 

Moctezuma,  265,  268 

Mt.  Lyell,  333 

Nevada  Consolidated,  297 

North  Butte,  323 

Old  Dominion,  346 

Osceola  Consolidated,  233 

Shannon,  293 

smelting,  226 

Tamarack,  241 

Tennessee  Copper,  323 

Utah  Consolidated,  330 

Utah  Copper  Co.,  299,  301 

Wallaroo  &  Moonta,  245 

Wolverine  mine,  227 
Cripple  Creek,  52 
dividend,  63 
effects  of  losses  on,  53 
efficiency  of  labor  as  a  function  of,  484 
fluctuation  of,  17 
gold,  455 

Camp  Bird,  465 


526 


INDEX 


Costs,  gold,  Goldfield,  Nevada,  505 

Kalgoorlie,  499 

Liberty  Bell,  467 

Mysore,  475 

Portland,  495 

Rand,  487 

Robinson,  481 

iron  mining,  Baraga  Co.,  Michigan, 
134 

Crystal  Falls,  133 

Gogebic  Co.,  Michigan,  132 

Iron  Co.,  Michigan,  132 

Lake  Superior  ores,  153 

low-grade  mines,  137 

Marquette  Co.,  Michigan,  135 

Menominee  Range,  134 

Mesabi  Range,  140,  147,  150 

Old  Ranges,  147 

Swamzy  district,  136 

transportation,  154 
labor,  47,  93 

Lake  Superior  Copper  mines,  222 
lead,  Southeast  Missouri,  356,  367 

St.  Joseph  Lead  Co.,  375 
lead-silver,  Broken  Hill  Proprietary, 
396 

Bunker  Hill  &  Sullivan,  382 

Daly  Judge,  400 

Daly  West,  398 

Federal  Mining  &  Smelting  Co., 
387 

smelting,  400,  402 
amortization,  403 
copper,  403 
freight,  404 
interest  charges,  403 
refining,  404 

milling  quartz-pyrite  ores,  gold,  451 
mining,  46 

partial  and  complete,  62 
pig  iron,  156 
reduction  of,  23 
selling,  63 
silver  mining,  Cobalt,  509 

Guanajuato,  516 

Kerr  Lake,  511 

Nipissing,  510 
smelting,  copper,  226 

iron,  156 
statement,  56 
supplies,  47 

transportation,  iron  mining,  154 
variations  of,  46 


Costs,  zinc  mining,  Butte  &  Superior,  433 

Grace  Zinc  Co.,  428 

Joplin  district,  427 

Wisconsin,  432 
Cost  in  rich  mines,  59 
Cost  to  price,  relation,  19 
Cripple  Creek,  52 

Crystal  Falls,  iron  mining  costs,  133 
Cuyuna  Range,  128 

Deferred  payments,  31 

Delays,  33 

Denton,  F.  W.,  235 

Depreciation,  63,  64 

Detroit  Copper   Mining  Co.,   266,  268, 

295 

Development  of  national  rivalries,  442 
D'lnvilliers,  E.  V.,  95,  101 
Disseminated  ores,  copper,  171 

lead,  369 

mining  costs,  171 

total  costs,  172 
Dividend  costs,  63 
Dividend,  present  value  of,  67 
Doe  Run  Lead  Co.,  374 
Douglas,  James,  220,  254,  267 
Douglas,  Ariz.,  smelting  at,  263 

Earnings,  bonanza,  38 

Earnings  on  plant  investment,  37 

Economy  and  speed,  60 

Economy  in  large  ownership,  iron  mining, 

153 

Efficiency  of  labor,  484 
Enterprise,  fundamentals  of,  33 
Ethnology,  Arizona,  198 
Exploitation,  waste  in,  56 
Exploration,  iron  mining,  152 
Extent  of  mining  business,  10 
External  factors,  50 

Factors,  external,  50 

internal,  50 
Federal  Lead  Co.,  374 
Federal  Mining  &  Smelting  Co.,  17,  387, 

393 

Financial  panic  of  1819,  441 
Fluctuation  of  costs  and  prices,  17 
Fundamentals  of  enterprise,  33 

Gary,  E.  H.,  98,  101,  156 
Geological  development  of  coal  measures, 
71 


INDEX 


527 


Gogebic  Co.,  Michigan,  costs,  iron  min- 
ing, 132 

Gogebic  Range,  128 
Gold,  available  supply,  438 
costs,  mining,  481 
Camp  Bird,  465 
Goldfield,  Nevada,  505 
Kalgoorlie,  499 
Liberty  Bell,  467 
Mysore,  475 
Portland,  495 
producing,  455 
quartz-pyrite  ores,  451 
Rand,  487 

Cripple  Creek,  490,  491 
economic  distribution  of  ores,  450 
Kalgoorlie,  490,  497 
mines,  Alaska  Mexican  Gold  Mining 

Co.,  462 

Alaska  Treadwell,  461 
Alaska  United  Gold  Mining  Co., 

462 

Camp  Bird,  465 
El  Oro,  Mexico,  468 
Goldfield,   Nevada,   milling,   502, 

504 

Homestake,  464 
Kalgoorlie,  490 
Kolar  district,  India,  470 
Liberty  Bell,  467 
Portland,  493 

Robinson  Gold  Mining  Co.,  480 
Treadwell  group,  459 
occurrence  and  production,  448 
production  statistics,  9,  454,  456,  486 

Transvaal,  437,  486 
quartz-pyrite  mines,  459 
Rand,  478 
relation    of    supply    to    industrial 

development,  440 
record  of  production,  439 
veins  or  deposits  in  situ,  450 
world's  production,  456 
Goldfield  Consolidated,  37 
Granby  Consolidated  Mining,  Smelting 

&  Power  Co.,  323 
Graton,  L.  C.,  333 
Greene-Cananea  Copper  Co.,  337 
Guanajuato  Development  Co.,  516 
Guess,  H.  A.,  374 

Hancock,  H.  L.,  344 
Hatch,  F.  H.,  470 


Hecla  Mining  Co.,  390 
Homestake,  464 
Homogeneity  of  ore,  52 
Hoover,  H.  C.,  32,  59 
Hoover's  theorem,  59 

Illinois,  coal  mining  costs,  700 
Individual  management,  iron  mining,  152 
Industrial  clearing  houses,  110 
Industrial  development,  relation  of  gold 

supply  to,  440 

Industrial  status  of  Napoleonic  era,  441 
Inspiration  Consolidated  Copper  Co.,  34, 

306 

Internal  factors,  50 

Inventory,    iron    mining,    capital    em- 
ployed, 144 
Investor,  69 

Investment,  earnings  on,  37 
Investments,  mining,  nature  of,  24 
Iron,  allocating,  115,  116 
mines,  146 

capital  employed,  142 
blast  furnaces,  144 
coal  and  coke  properties,  143 
inventory,  144 
summary,  144 
surplus,  144 
transportation,  143 
Michigan,  28 
mining,  automatic  handling  of  ore, 

155 

costs,  Baraga  Co  ,  Michigan,  134 
Crystal  Falls,  133 
Gogebic  Co.,  Michigan,  132 
Iron  Co.,  Michigan,  132 
Lake  Superior  ores,  153 
Low-grade  mines,  137 
Marquette  Co.,  Michigan,  135 
Menominee  Range,  134 
Mesabic  Range,  140,  147,  150 
Old  Ranges,  147 
Swamzy  district,  136 
transportation,  154 
economy  in  large  ownership,  153 
explorations,  152 
individual  management,  152 
maps,  152 

open  cut  vs.  underground,  148 
ore,  Lake  Superior,  123,  127 

shipments,  138 
reserves,  117 
royalties,  146 


528 


INDEX 


Iron,  mining,  taxes,  151 

transportation  costs,  154 
U.  S.  Steel  Corp.  mines,  164 
unwatering  open  pits,  158 
Iron  Co.,  Michigan,  iron  mining  costs,  132 
Iron  ranges,  Lake  Superior,  Cuyuna,  128 
Gogebic,  128 
Marquette,  129 
Menominee,  128 
Mesabi,  128 
Vermillion,  128 
Isle  Royal  Copper  Co.,  231 
costs,  232 
output,  232 

Jackling,  D.  C.,  271 
Jerome,  Ariz.,  201 

belt  rocks,  203 

dioritic  dikes,  210 

formation  of  deposits,  206,  207 

geologic  facts  and  deductions,  216 

greenstones,  209 

mineralized  area,  211 

quartz  porphyries,  209 

structural  features,  208 

unconformities,  202 

volcanic  activity,  206 

KerrLake  Mining  Co.,  511 
Kolar  district,  India,  470 

cost  and  grade  of  ore,  476 

factors  in  mining,  471 

high  development  cost,  475 

labor,  470 

methods  of  treatment,  472 
.  wages  and  cost  of  labor,  477 

Labor  costs,  47,  93 

Mysore,  477 

Rand,  483 
Lake  Superior  copper  mines,  221 

Ahmeek,  229 

Allouez  Mining  Co.,  231 

Baltic  Lode,  235 

Calumet  &  Hecla,  225,  226,  241,  242 

Champion,  238 

concentrating  mills,  225 

Copper  Range  Consolidated,  226 

Copper  Range  mines,  236 

cost;,,  222 

cost  of  smelting,  226 

Isle  Royal,  231 

Michigan  Smelting  Co.,  225 


Lake  Superior  copper  mines,  nature  of 

deposits,  226 

Osceola  Consolidated,  233 
output,  222 
plants  required,  224 
Quincy,  225 
smelting  costs,  226 
smelting  plants,  225 
starting  and  filling,  235 
Tamarack,  226,  241 
Trimountain,  239 
Wolverine,  227 
Lake  Superior  iron  ores,  shipments,  123, 

127,  138 

Lake  Superior  iron  ranges,  Cuyuna,  128 
Gogebic,  128 
Marquette,  129 
Menominee,  128 
Mesabi,  128 
Vermillion,  128 
Lake  Superior  ores,  costs,  153 
Lake  Superior  Smtlting  Co.,  226 
Large  ownership,  economy  in,  153 
Lead,  349 

costs,  St.  Joseph  Lead  Co.,  375 
Southeast  Missouri,  356,  367 
Doe  Run  Lead  Co.,  374 
Federal  Lead  Co.,  374 
mining,  349 
prices,  13 

production  statistics,  9,  352,  355 
St.  Joseph  Lead  Co.,  375 
Southeast  Missouri,  356,  367 
capital  in  exploration,  371 
milling,  371 
mining  plants,  371 
power  plants,  371 
shafts,  371 
smelting  plants,  371 
extent  of  district,  369 
milling,  370 
mining,  369 
smelting,  370 
world's  production,  355 
Lead-silver  mining,  376 

American  Smelting  &  Refining  Co., 

405 

Broken  Hill  Proprietary,  395 
Bunker  Hill  &  Sullivan,  381 
costs,  Broken  Hill  Proprietary,  396 
Bunker  Hill  &  Sullivan,  396 
Daly-Judge,  400 
Daly- West,  398 


INDEX 


529 


Lead-silver  mining,   Federal    Mining   & 

Smelting  Co.,  387 
smelting,  402 

amortization,  403 
copper,  403 
freight,  404 
interest  charges,  403 
refining,  404 
Daly-Judge,  397 
Daly- West,  397 
Federal  Mining  &  Smelting  Co.,  387, 

393 

Hecla  Mining  Co.,  390 
refineries  in  U.  S.,  412 
Silver  King,  397 
smelters,  412 
smelting  costs,  400 
Leggett,  T.  H.,  478,  482 
Leith,  C.  K.,  207 
Liberty  Bell,  467 
Losses,  causes  of,  54 
coal,  55 
copper,  55 
Cripple  Creek,  55 
determining  costs,  53 
iron,  55 
lead,  55 
milling,  55 
Missouri,  55 
Pittsburgh,  55 
smelting,  55 
Low^costs  vs.  greater  expense,  52 

MacNeil,  C.  M.,  271 

Maintenance,  63 

Management,  57 

Maps,  iron  mines,  152 

Marketing  product,  49 

Marquette  Co.,   Michigan,  iron  mining 

costs,  135 

Marquette  Range,  129 
Mayer  Copper  mines,  218 
McKenzie,  J.  H.,  272,  504 
McNaughton,  J.,  172 
McNeill,  C.  H.,  286 
Menominee  Range,  128 

iron  mining  costs,  134 
Merrill,  I.  L.,  259 
Mesabi  Range,  128 

iron  mining  costs,  140,  147,  150 
Mesozoic  coal  fields,  79 
Miami  Copper  Co.,  29,  35,  280,  284 
Michigan  iron  mines,  28 

34 


Michigan  Smelting  Co.,  225 

Milling  losses,  55 

Mineral  production  statistics,  11 

Mineral  products  of  U.  S.,  value  of,  14 

Mines,  profit  of,  20 

Mining  business,  extent  of,  10 

Mining  concerns,  valuation  of,  15 

Mining,  costs,  46 

coal,  92 

labor  and  wages,  93 

Cripple  Creek,  52 

statement  of,  56 

Mining  investments,  nature  of,  24 
Mining  property,  value  of,  10 
Moctezuma  Copper  Co.,  265,  267,  291 
Mohawk  Mining  Co.,  225 
Monongahela  River  Consolidated  Coal  & 

Coke  Co.,  97 
Mt.  Lyell,  332 

Napoleonic  era,  441 

National  rivalries,  442 

Nature  and  use  of  capital,  31 

Nature  of  mining  investments,  24 

Nevada  Consolidated  Copper  Co.,  296 

Newberry,  26 

New  capital  in  coal  mining,  107 

Nineteenth'  century  wars,  441 

Noble,  L.  F.,  207 

Northern  Arizona  plateau,  192 

Northern  California  copper  mines,  333 

Northwestern  copper  field,  311 

Old  Dominion  Copper  Mining  &  Smelting 

Co.,  345 
Old  Range  iron  ores,  123,  127 

mining  costs,  147 
Oliver,  H.  W.,  259 

Open  cut  vs,  underground  mining,  148 
Open  pits,  unwatering,  150 
Operating  charges,  63 
Ordovician  and   Cambrian  occurrences, 

362 
Ore,  automatic  handling,  iron  mining,  155 

homogeneity  of,  52 

reserves,  25 
Orebody,  altitude  of,  51 

size,  50 
Osceola  Consolidated  Mining  Co.,  233 

costs,  233,  234 

output,  233,  234 
Output,  Ahme.ek,  229 

Alaska  Mexican,  462 


530 


INDEX 


Output,  Alaska  Treadwell,  461 

Alaska  United,  462 

Allouez  Mining  Co.,  231 

Anaconda,  231,  322 

Arizona  Commercial,  348 

Boston  &  Montana,  322 

Bunker  Hill  &  Sullivan,  382 

Butte  &  Boston,  322 

Butte  &  Superior,  433 

Butte  Coalition,  323 

Calumet  &  Arizona,  257,  261 

Chino,  286 

Copper  Queen,  256,  269 

Daly  Judge,  399 

Daly  West,  398 

Detroit  Copper  Co.,  295 

Federal    Mining    &    Smelting    Co., 
387,  393 

Greene-Cananea,  342 

Greene  Consolidated,  338 

Hecla  Mining  Co.,  390 

Homestake,  464 

Inspiration  Consolidated,  310 

Isle  Royal  Copper  Co.,  232 

Kalgoorlie,  499 

Kolar  district,  473 

Lake  Superior  copper  mines,  222 

Liberty  Bell,  467 

Miami  Copper  Co.,  285 

Moctezuma,  268,  291 

Nevada  Consolidated,  297 

North  Butte,  323 

Old  Dominion,  346 

Ray  Consolidated,  287 

Superior  &  Pittsburg,  258 

Tombstone  Mill  &  Mining  Co.,  518 

United  Verde,  213 

Utah  Consolidated,  331 

Utah  Copper  Co.,  299,  301 
Ownership,  private,  42 

Paleozoic  coal  fields,  78 

Paleozoic  geography,  364 

Partial  and  complete  costs,  62 

Payments,  deferred,  31 

Penrose,  S.,  271 

Philadelphia  &  Reading  Coal  and  Iron 

Co.,  61,  102,  104 
Pig  iron  costs,  156 

production  statistics,  9,  138,  139 

world's  production,  121 
Pittsburg  Coal  Co.,  96 
Plant  investment,  earnings  on,  37 


Plants   required,   Lake   Superior   copper 

mines,  224 
Population,  49 

Arizona,  198 
Porphyry  coppers,  271,  284 

Arizona,  293 

Chino,  286 

Inspiration  Consolidated,  306 

Miami,  280,  284 

Moctezuma,  291 

Nevada  Consolidated,  296 

Ray  Consolidated,  287 

Shannon,  293 

Utah,  271,  297 
Portland  mine,  493 

milling,  494 
Power,  source  of,  1 
Present  value,  29,  32,  43 
Present  value  of  annual  dividend,  67 
Prices,  average,  16 

coal  at  mines,  88,  94 

copper,  13,  179 

fluctuation  of,  17 

lead,  13,  353 

relation  of  cost  to,  19 

silver,  13 

zinc,  13 

Private  ownership,  42 
Product,  marketing,  49 

transportation,  49 

Production  statistics,  coal,  9,  81,  84,  85, 
86 

copper,  9,  180,  190 

gold,  9,  454,  456,  486 

lead,  9,  352,  353,  354 

mineral,  11 

pig  iron,  9,  121,  138 

silver,  9 

steel,  121 

U.  S.  Steel  Corp.,  157 

zinc,  413 

Profit,  normal,  20 
Profits,  U.  S.  Steel  Corp.,  162 
Public  policy  in  coal  mining,  105 

Quartz-pyrite    ores,    mining  costs,   cop- 
per, 174 
gold,  451 

Rand,  478 

Ransome,  F.  L.,  191,  193,  194,  251 
Ray  Consolidated  Copper  Co.,  287 
Recovery  and  losses,  55 


INDEX 


531 


Reduction  of  costs,  23 
Relation  of  cost  to  price,  19 
Requa,  M.,  272 
Reserves,  coal,  91 

iron  ore,  117 

ore,  25 

Rice,  G.  S.,  100,  105 
Rich  mines  cost  more,  59 
Ricketts,  L.  D.,  337 
Robinson  Gold  Mining  Co.,  480 
Royalties,  iron  mining,  146 

Sales,  R.  H.,  315 

St.  Joseph  Lead  Co.,  373 

Schoolcraft,  3 

Selling  costs,  63 

Shannon  Copper  Co.,  293 

Sherman,  G.,  270 

Silver,  mines,  Chief  Consolidated,  513 

Guanajuato     Development     Co., 

516 

Kerr  Lake  Mining  Co.,  511 
Nipissing,  510 
Tombstone    Consolidated    Mines 

Co.,  518,  521 
Tombstone   Mill  &   Mining   Co., 

518 
mining,  506 

Cobalt  district,  507 
costs,  Cobalt,  509 
Guanajuato,  516 
Kerr  Lake,  511 
Nipissing,  510 
Guanajuato,  Mexico,  514 
Tintic  district,  Utah,  512 
Tombstone,  518 
prices,  13 

production  statistics,  9 
Silver-lead  mining,  376 
See  also  Lead-silver. 
Size  of  orebody,  50 
Smelting,  costs,  Copper,  Lake  Superior 

Smelting  Co.,  226 
losses,  55 
plants,  Lake  Superior  copper  mines, 

225 

Smyth,  H.  L.,  32 
Sorting  and  filling,  235 
Source  of  power,  1 
Southeast  Missouri,  lead,  356,  367 
Southwest  copper  field,  189 
Southwest  Missouri,  zinc,  421 
Speed,  60 


Statement  of  mining  costs,  56 

Staunton,  W.  F.,  518 

Steel,  world's  production,  121 

Superior  and  Pittsburg  Copper  Co.,  258, 

260 

Supplies,  cost  of,  47 
Surplus,  iron  mining,  144 

capital  employed,  144 

U.  S.  Steel  Corp.,  162 
Swamzy  district,  iron  mining  costs,  136 

Tamarack,  220,  241 

costs,  241 

Taxes,  iron  mines,  151 
Taylor,  L.  H.,  Jr.,  283 
Taylor  and  Brunton,  47 
Temperature  underground,  27 
Tener,  G.  E.,  220 
Tennessee  Copper  Co.,  328 
Tertiary  coal  fields,  81 
Thickness  of  seam  as  factor  in  mining 

costs,  103 

Thiessen,  and  White,  75 
Time  for  completion,  34 
Tombstone  Consolidated  Mines  Co.,  518, 

521 

Tombstone  Mill  and  Mining  Co.,  518 
Transportation  of  product,  49 

iron  mining,  154 

capital  employed,  143 
costs,  154 
Trimountain  Mining  Co.,  239 

Unconformities  at  Jerome,  202 
Underground  conditions,  48 
Underground  temperature,  49 
U.  S.  Steel  Corp.,  38,  60,  61,  142  157 

blast  furnace,  costs,  168 
operation,  168 

coal  and  coke  properties,  166,  169 

iron  mines,  164 

iron  ore  properties,  166 

manufacturing  properties,  166 

miscellaneous  properties,  166 

production  statistics,  157 

profits,  162 

surplus,  162 

transportation  properties,  166,  16'J 

total  investment,  165 
United  Verde,  49,  209 

low-grade  ore,  213 

output,  213 
United  Verde  Extension,  39,  41,  211,  215 


532 


INDEX 


Un watering  open  pits,  iron  mining,  150 
Use  of  capital,  31 
Utah  Consolidated,  329 
Utah  Copper  Co.,  271,  279,  297 
ore  reserves,  303 

Valuation  of  mining  concerns,  15 
Value,  of  coal  at  mine,  88,  94 

mineral  products  of  U.  S.,  14 

mining  property,  10 

present,  29,  32,  43 
Van  Hise,  26 
Variations  of  cost,  46 
Vermillion  Range,  127 
Virginia,  coal  mining  costs,  99 

coking  costs,  101 
Volcanic  activity,  Jerome,  206 

Wallaroo  &  Moonta,  174,  344 
Wars,  nineteenth  century,  441 
Waste,  in  coal  mining,  105 

in  exploitation,  56 

West  Virginia,  coal  mining  costs,  109 
White,  D.,  75 
White  and  Thiessen,  -75 
Winchell,  H.  V.,  315,  319 
Wisconsin,  zinc  mining,  431 
Witwatersrand,  478 
Wolverine  mine,  costs,  225,  227,  237 
Working  capital,  35 


World's  production,  coal,  84 
copper,  180,  181 
gold,  456 
pig  iron,  121 
steel,  121 
«inc,  418,  419 

Zinc,  mining,  421 

Butte  &  Superior,  432 
Consolidated  Interstate  Callahan, 

435 

costs,  Butte  &  Superior,  433 
Grace  Zinc  Co.,  428 
Joplin  district,  427 
Wisconsin,  432 
Joplin  district,  422 
costs,  427 
exploration,  424 
geology,  422 
losses  in  mining,  426 
milling  methods,  426 
mining  methods,  425 
Miami  district,  429 
Southwest  Missouri,  421 
Wisconsin,  431 
prices,  13 

production  statistics,  413 
smelting,  414 

Oklahoma,  415 
world's  production,  418,  419 


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